The biggest challenge faced by all small businesses as they grow and scale is the need for additional capital. It doesn't matter which stage your business is in; you need an infusion of external capital to capitalise on the available opportunities and take your business to the next level.
A majority of small businesses resort to borrowing to meet their capital needs. But, borrowing money for your business needs is challenging. There are several hurdles to be crossed before you get the capital your business needs.
Banks often turn down business loan requests due to lack of collateral, insufficient business history, satisfactory credit scores, etc., and even if you manage to get the capital you need, you will have to pay steep interests on the principal, which can further add to your financial woes.
But, worry not! In this guide, we show you how to grow a small business, without borrowing. Yes, you can learn how to expand a small business without or with minimum borrowing. Continue reading to explore 5 smart tips on how to grow a small business without piling on too much debt.
Tip #1: Diligently Monitor and Track your Cash Flow
“A healthy cash flow is the first stepping stone to grow and expand your business.”
If you’re looking to expand and take your business to the next level, the first step is to understand your cash flow. For example, having several slow-paying customers can, in turn, slow down your expansion plans, as a significant chunk of your receivables is pending.
While pending receivables are part and parcel of regular business operations, having too much outstanding can put the brakes on your expansion efforts.
Here are a few business growth tips to get customers to pay on time:
- Offer discounts to customers who pay up-front.
- Keep track of pending payments and pursue them diligently.
- Tighten your payment policy when onboarding a new customer.
Using handy apps like OkCredit makes it easy to track your payables, receivables and other expenses on a day-to-day basis. Having your inflows and outflows at your fingertips is crucial for business growth. It gives you a clear picture of how to budget and better use the available finances in hand.
Tip #2: Maximise Profits and Redirect Them for Expansion
“Every business wants to make a profit. But, not many channel their efforts to increase profits.”
As your business grows and sales increases, it’s easy to lose track of products and services that are your cash cows. Cash cows are products/services that are profitable and give you high revenues. Try to identify the highest-profit making products in your portfolio.
- Try to focus your efforts on expanding sales of these products via additional marketing.
This helps in boosting your profits, which you can then redirect to expanding your business.
Tip #3: Tap into your Customer Network to Spur Growth
If you’re wondering how to expand a small business, the answer is right in front of you. Yes, we’re talking about leveraging your existing customers to help you spread the word about your brand. It’s an easy and effective strategy to scale up. Here are a few ways to implement this strategy:
- Ask you are Happy Customers to Post a Review
Once a customer finishes a purchase with you, follow up via email/Whatsapp to check if they're satisfied with the product/service. If yes, you can request them to share their experience on your Google Business Page, Facebook or Instagram. Send them direct links to where they can post reviews directly so that they can post quickly, without much of a hassle.
- Provide your Customers with a Referral Code to Spread the Word
Creating a referral program is a great way to spread the word about your brand. A referral program offers existing customers an incentive to market your business to their network. Think of it as free promotion done by existing customers on your behalf.
Tip #4: Seek out Non-Debt Funding Options
While non-debt funding options are difficult to come by, it is not entirely impossible.
Some popular non-debt funding options include leasing equipment out (to make additional revenue), merchant cash advances, invoice discounting, etc. These are a great way to borrow without steep interest rates.
For example, in invoice discounting, a third-party lender purchases your receivables and pays you around 50% to 80% of the invoice's value upfront. The lender then collects the receivables and pays you the reminder. They charge a nominal fee for this service. This non-debt funding can help you access ready cash sans any interest.
Explore different avenues of non-debt funding solutions and choose the best one that helps you grow.
Tip #5: Establish Brand Authority in your Domain
“In today’s cluttered marketplace, brands that have a unique voice and personality stand out and win customers in the long-run.”
You need to focus on building brand authority. Authoritative brands are those that customers trust. These brands are the go-to source of information for any topic in their niche/industry. Spending time establishing your authority in your domain is crucial to business expansion. Only when customers trust your brand they are likely to spread the word about your brand in their circle. This helps in establishing the longevity of the brand.
- Be willing to share helpful information to customers via different channels like blog posts, FAQs, social media posts, tutorial videos, etc.
- Avoid delivering a sales pitch while sharing knowledge. This reduces the legibility of your brand. To avoid this, keep the sales pitches and knowledge sharing separate – preferably in different posts.
Growing a small business takes time, effort and resources. Just because you're cash-challenged, it doesn't mean you have to put your business expansion dreams on hold. Explore the tips listed above and brainstorm creative ways on how to grow your business.
Remember that for any business to grow, you need to focus on streamlining daily operations like bookkeeping, inventory management, etc. Though these tasks may seem minor, they are essential to keep your business running like a well-oiled piece of machinery. Productivity in these areas makes a ton of difference to your business line. Apps like OkCredit can help you streamline bookkeeping and other administrative tasks, freeing up your time to focus on core business practices and expansion.
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Q. Which is the most affordable way to expand my product line?
Ans. If you’re looking for tips on how to expand a small business without spending a fortune, then the best option is to expand your product line to include related products. To give an example, let’s say your brand focuses on designer clothes for boys.
Adding a new product line to include boy shoes, caps, and belts is cheaper than expanding the product line to include girls' clothing. This is because, when you expand to include accessories for boys, you can market it to your existing customers. On the other hand, branching out to girls' clothing requires extensive marketing and targeting a new set of customers, which costs more.
So, focus on including related products if you’re running low on marketing dollars and working capital.
Q. How can I accelerate my income without spending much?
Ans. There are several ways to increase your business income that don’t cost a fortune. Here are some smart small business growth tips to increase revenues:
- Cross-selling – Add complementary products/services that fit naturally into your product line.
- Up-selling – Target existing customers and get them to purchase more expensive products. Since these customers have already purchased from you, they are likely to make a consecutive purchase.
- Prioritise social media – Social media is an effective marketing channel to increase sales revenues. The best part – it doesn't cost much. All you need is a solid social media strategy, and you're set to boost revenues and win customers quickly.
Q. What are the best affordable ways to market my small business?
Ans. Contrary to widespread assumption, it's possible to market and expand your small business without having deep marketing budgets. Here are some of the best affordable and effective ways to market your small business:
- Affiliate Marketing – Here, you have a network of affiliates who promote your products/services to their networks. In return, you offer the affiliate a commission every time a customer purchases your products via the affiliate link.
- Influencer Marketing – In this marketing strategy, you partner with influencers in your niche and promote your products to the influencer's followers. The cost of influencer marketing depends on the type of partnership and the reach of the influencer.
- Host a Free Webinar – Webinars are all the latest craze. They help you establish your authority in your domain while introducing your products/services to a broader audience.
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