In this post we talk about how to double your business revenue with 10% effort.
I’ve spent a lot of time with freelancers and entrepreneurs who are stuck at a stage where their business is up and running but aren’t able to identify how to grow it any further. A common adage I often heard was them wanting to “work smarter, not harder”, yet all I ever did was see them working harder, trading more hours and more effort to grow their business. I’ve been a victim of this too, so I totally understand. Wanting to increase revenue but the seemingly only option being to just work harder and devote more time.
A general piece of advice I’ve learnt during my time as an entrepreneur and working with people in personal development programs; when you hear someone say, “work smarter, not harder” make sure to ask them how they see that happening. Their response will be the difference between someone who genuinely has real advice and strategies, and someone just parroting phrases that sound smart.
How to Double Your Business Revenue with 10% Effort
So what does working smarter actually look like?
We’ve all heard about the 80/20 rule, the cliché that 80% of our results come from only 20% of our work. That we need to spend our time focusing on that magical 20%, but what if you don’t know where to look? It’s impossible to focus or improve an area of your life or business when you don’t even know where to look in the first place. Thankfully I’m here to help share some wisdom from a renowned five-figure business seminar I attended (which I won’t name for copyright reasons) on how to organically double your business earnings with only 10% effort using the principles of Kaizen.
Kaizen is a Japanese business term for continuous improvement that actually has its roots in American business. The basic premise of Kaizen is that large changes are a result of smaller widespread improvements where the end sum is much larger than its smaller parts, where 1 plus 1 can result in 3, not just 2, and I’m here to show you how to create that magic.
First let’s start by going over the three most approachable areas of a business that Kaizen principles can immediately be applied to:
- Product/Service price
- Repeat Sales
- Target Audience
The aim of this exercise is to increase each category by a relatively unnoticeable and easily digestible 10%. The reason for just aiming for 10% is that it’s achievable, remember, we’re aiming for small sweeping improvements, not a whole cultural shift. Using the magic of compounding (read: multiplication), we can see revenue growth double by the end of three years.
Product/Service price
Very few people will argue about a 10% price increase if it’s kept to an annual adjustment as the majority of people are used to yearly price increases due to inflation. I want you to be achieving results and not dealing with staff mutinies or customer backlashes, so be very conscious if you do intend to increase prices past 10%, just make sure there’s a clear explanation as to why, maybe the contents have improved or your market standing has improved.
I also wouldn’t recommend increasing prices more than once a year but if you do, make sure no more than twice a year. More than that and your customers will start feeling like you’re taking advantage of them if there isn’t a good explanation.
In my previous beverage company, I was able to justify two price increases within half a year due to a complete overhaul of products for sale, while still keeping some of the older mainstays at their original price.
Repeat Sales
The second small change will come from increasing repeat sales by 10%, whether that’s done through loyalty programs, store specials, follow up services, subscriptions, or possibly upgrade packages for one-off items. Obviously this category will have the most flexibility due to the variety of products and services out there, but the main point is getting people to come back to you.
This isn’t nearly as difficult as many people would believe as subscription based models have become quite the norm for many buyers. Remember we’re just aiming for 1 in 10 customers here, not all of them, just 1 in every 10 that will come back.
For my coaching services I had follow up coaching programs or groups that acted as a natural continuation of my client’s journey.
Target Audience
Lastly this brings us to increasing your customer base and has a symbiotic relationship you’re your returning customers. Increasing one’s customer base could be done through the traditional marketing route, but everyone does it and we’re trying to keep outgoing costs consistent, so let’s look at an arguably better marketing strategy – incentivizing you’re existing customer base to promote your product.
Your existing customer base is not only the lifeblood of your business but also its most avid fans. Sometimes I hear people question their customers’ loyalty, look, if a customer has purchased from you or paid for your services more than twice, then they’re your customers and your business is on their minds. And if your product or service was able to meet their needs, then why wouldn’t they be?
Give them a reason to talk about and show off your product or service. Reward them for being your customer and incentivize them when they introduce family or friends. Obviously not all of them will, but once again we’re just aiming for 1 out of every 10 customers who liked your product enough to mention or show it to people in their life.
This is usually the point when a lot of people throw their hands up to say that they can’t ask their customers to promote their products for them, to which I say, you might be surprised by how many of your customers already do.
Remember, you do a good job, so why wouldn’t they? The only difference now is that these awesome customers of yours get a reward or kickback for doing so and you get a chance to find out who your most loyal customers are. It’s a win-win for all.
In my previous business, I once conducted a survey to gather a myriad of information to help guide me in my rebranding of said business. I was astounded by just how many people mentioned that one of the main reasons for their frequency was due to the atmosphere and customer service, and that they already had brought in friends or family. I had no idea until I asked.
The Crunchy Numbers
Now that I’ve covered the basic overview of the three main categories to focus on as well as examples that I used in my own businesses to increase revenue, it’s time to get to the numbers part that most people tend to avoid. Don’t sweat, I’ll go easy on you.
I’ve been harking on about 10% increases across each category but this number isn’t set in stone. If you think one area could see an increase of 15% with the same effort but another area would only see a 5% increase then so be it. The goal is to make each increase easily achievable and sustainable so it’s up to you how best to adjust the numbers in each category, but you’ll want things to average out as if there was a 10% increase across the board.
Math time:
For simplicities sake, let’s say your business currently has 10 customers who buy 10 widgets each year at $10. Your business equation would look like this:
Currently: 10 customers x 10 widgets x $10 = $1,000 p/a
If we apply the principles of Kaizen and improve the areas by 10% each category would increase by 1 and your business equation would look like this:
Year 1: 11 customers x 11 widgets x $11 = $1,331 p/a
By the end of the first year your overall turnover has increased by 30% even though we only focused on small 10% improvements. Which in this case is just one more customer, one more repeat sale, and one extra dollar. Telling your staff to talk to one more customer or offer one more item is the proverbial, “would you like fries with that?” Small short term effort, but high long term reward.
Now let’s start looking into the next year and what happens when we continue to focus on our 10% improvement system for year two:
Year 2: 12 customers x 12 widgets x $12 = $1,728
A 30% increase from year one to year two, but a hefty 72% increase from where we started, but the same 10% increase in effort.
Instead of an additive: 30% + 30% = 60%.
Compounding amplifies the equation: 30% + 30% = 72%.
From the end of year two we can already start to see the beneficial effects of compounding taking place. The results of compounding are far larger than the sum of its parts.
Now I know some of you may argue that this is actually a 20% increase in effort but that’s because you’re basing it from where we started and you’re jumping ahead. Keep in mind that this is done over two years and our standards have been steadily growing. What was once a 10% increase in effort and sales had become the new norm, and now all we’re doing is continuing the growth train but in a light way. Even if you were to say a 20% increase in effort or improvement, a 72% revenue increase seems like a great tradeoff.
Imagine this, let’s say you can currently perform 10 push-ups in a row. If for this year, your entire goal is to increase that number by 1 (10%), and at the end of every 10th pushup you would tell yourself, “just one more”. By the end of the year, I’d have absolute full faith that you’d be someone that could perform 11 pushups in a row and that it has become your standard. So for the following year if we apply the 10% improvement rule again, that “just one more” pushup target would become 12.
Finally in year 3 our equation would look like this:
Year 3: 13 customers x 13 widgets x $13 = $2,197
An almost 30% increase again year-on-year, but a staggering 120% increase from where we first started.
Conclusion
This is the power of Kaizen when broken down into quantitative equations. Each small incremental improvement does not exist in a world of its own and instead compounds with every other incremental improvement.
Imagine each small additional as a brick. A single brick is easily toppled or shattered, but over time as more and more bricks are stacked upon one another they become substantially stronger until they can form a wall and eventually even a house. Slow and steady really does win the race here.
I am fully aware that this can be an overly simplistic view of business growth and development, and circumstances around competitive pricing, economy, and market share will cause this to fluctuate. But this is a system that allows one to make what may seem like impossible growth into digestible chunks that any entrepreneur can start incorporating right now and start seeing achievable growth beyond just “working harder”. No improvement is an island nor inconsequential.
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