How Much Should Your Business Be Growing?
By Laura Laaman
Of course every business owner wants their business to grow—but have you thought about why growth is so important?
- Costs are increasing; as the industry grows, so do expenses.
- Labor wages continue to increase, and you need to pay your people well.
- You want to be able to continue to repair and upgrade your business, keeping it in line with the changing desires of pet parents.
Growth shows potential buyers that your business has upward movement.
This industry enjoys continual growth, year over year. Pet boarding and grooming earned 6.16 billion dollars in 2017, with an estimated growth of more than 5% in 2018. However, the competition is also fiercer than ever, and as you know, success doesn’t come by accident. If your business isn’t growing at a regular and substantial rate, you could be left behind or swallowed up by the sea of competition.
Teija Heikkila, a Certified M&A Professional, Merger & Acquisition Master Intermediary, and principal broker at National Kennel Sales & Appraisals, knows that when it comes time to sell your business, a steady history of growth exponentially changes its value. In this pattern of industry growth, potential buyers look for businesses trending upwards.
“To maximize on business value and future selling price, revenue growth is crucial,” Teija advised. “We’re seeing double–digit growth in businesses that observe ‘best practices.’”
Teija pointed out three major benefits these growing businesses enjoy:
- The owners are increasing their personal wealth while owning the business.
- The business value continues to expand.
- When it’s time to sell, the business will attract multiple buyers, driving the price up to its max.
If you’re not growing in size at least 10% or above each year, here are the biggest culprits and ways to address them:
You’re not appreciating how many clients you naturally lose each year through no fault of your own.
To understand exactly how many clients you lose, you should conduct a client retention exercise. Even the healthiest business can expect a loss of 30% of existing clients every year. Your clients may change jobs or move, and on top of that is the pet factor. Pets have a much shorter life span, so when a pet passes away or ages out of a service, you’ve lost a client and the corresponding revenue. Therefore, you need to smartly acquire new clients to counteract this natural attrition and continue growing.
You’re not appreciating how your market share is being attacked.
If your business has been open for more than ten years, you’re likely accustomed to being the main game in town. This means you’ve had big waitlists on holidays. Now, pet parents have an abundance of choices. With the advent of such services as Rover.com and Wagwalking.com, pet care is only a few clicks away. Additionally, large chains, as well as the pet parent’s family and friends, are silently stealing your prospective and existing clients.
Not enough phone lines to handle your increased database size.
Cell phones make calling your facility that much easier. Your average client calls to make a reservation, check on their pet, let you know they’re running late, etc. That means your call volume has increased. Has your number of phone lines increased? Every missed call is a missed opportunity, and so much of your business comes through the phone. Make sure you have enough lines and that calls are handled well.
Your new client calls are being mishandled. The days of “Would someone answer the phone already?!” are over for successful businesses. New client calls are the lifeblood of your business and need to be handled with care and expertise. Prospective client calls should be received by well–trained staff chosen especially for their skills on the phone. Not every member of staff is well–suited for the phone, and every mishandled call is lost revenue. Establish consistent and effective phone protocols, and train your best staff candidates on how to turn prospective client calls into reservations.
Your business is not getting enough calls or the right type of calls.
Marketing today is very complicated. It used to be as simple as placing ads in the phonebook. Now, you need to have a strong website and a robust yet cost–effective advertising plan. It’s so easy to waste precious advertising dollars in this competitive market. Although it might seem subtle at first, the ability to determine how much is not enough or too much, and if it’s being spent effectively for your specific market and business, has a profound impact on your bottom line. It’s often the difference between thriving and failure.
Your prices are not keeping up with costs.
Of course you want to charge fees your clients will think are reasonable. But do you know what your services are actually worth in today’s market? Among other key factors, you’ll need to regularly examine your expenses, what you charge customers, and your occupancy to determine a healthy profit margin. Pricing is a fluid value that needs to be continually evaluated. However, adjusting prices has many moving parts that need proper handling.
Ultimately, your success depends on your willingness to objectively measure your opportunities, identify areas needing improvement and enact action plans. Don’t be afraid of change—success is a constantly moving target.
Laura Laaman is president of Outstanding Pet Care. Outstanding Pet Care guarantees to substantially increase the revenues of its clients with its proven services. If you’re interested in growing your revenues, schedule an individual consultation with Laura Laaman or one of her team members. Call Outstanding Pet Care at 1-888-735-5667 or go to www.OutstandingPetCare.com.