5 Things That Stop Small Businesses Growing
Avoid these common pitfalls to make sure your renovation business keeps moving forwards
HouzzUK
6 September 2017
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We're the happy Houzz UK Team and you'll see us around the site answering questions,... More
Want to grow your small renovation business? Check out these typical mistakes firms make when expanding their business to make sure your organisation goes from strength to strength.
Mistake 1: Relying on referrals
There’s no better way to gain new business than when a customer recommends you to a friend. You won’t have had to lay out any marketing costs, and when you work with a client who has been given your name as a referral, an element of trust is often already established from the beginning.
However, be careful not to rely too much on recommendations for growing your business. Not every happy customer has the time or inclination to recommend you to others, so if this avenue dries up you might find yourself with no other leads to follow.
Solution: Take time to explore other ways of finding new business, such as improving your website, marketing your firm on social media and signing up to web communities like Houzz. Even if business is booming, these other channels will pay off in the long run.
Check out our beginner’s guide to social media marketing
There’s no better way to gain new business than when a customer recommends you to a friend. You won’t have had to lay out any marketing costs, and when you work with a client who has been given your name as a referral, an element of trust is often already established from the beginning.
However, be careful not to rely too much on recommendations for growing your business. Not every happy customer has the time or inclination to recommend you to others, so if this avenue dries up you might find yourself with no other leads to follow.
Solution: Take time to explore other ways of finding new business, such as improving your website, marketing your firm on social media and signing up to web communities like Houzz. Even if business is booming, these other channels will pay off in the long run.
Check out our beginner’s guide to social media marketing
Mistake 2: Doing it all yourself
Small business owners often find themselves wearing many hats, juggling projects with all the other tasks of running a firm. You probably don’t think you have the resources to delegate tasks, but in fact this cost saving might actually waste money in the long run.
Solution: If you’re finding yourself spending ages working out your accounts, for example, it might be time to hire a professional and use your time more valuably on tasks that will help your business to grow.
However, Ran Ankory of Scenario Architecture advises: “Its a matter of finding the right balance by asking questions about each and every task that you’re considering to outsource.”
“Why am I considering outsourcing this aspect of my business, is it because it is not what we specialise in, and will it be more efficient and cost effective to collaborate with someone else? Or am I simply avoiding aspects that are not what I love doing and do best, but are essential to developing a new business?”
He also recommends you ask the question: “Must I outsource an entire task, or can I select parts of it which would not compromise my overview as a managing director?”
And finally: “Can I work with the potential company I am considering partnering with to find the correct balance and make sure that the communication and data flow is efficient enough to keep the necessary control mechanisms intact?”
Small business owners often find themselves wearing many hats, juggling projects with all the other tasks of running a firm. You probably don’t think you have the resources to delegate tasks, but in fact this cost saving might actually waste money in the long run.
Solution: If you’re finding yourself spending ages working out your accounts, for example, it might be time to hire a professional and use your time more valuably on tasks that will help your business to grow.
However, Ran Ankory of Scenario Architecture advises: “Its a matter of finding the right balance by asking questions about each and every task that you’re considering to outsource.”
“Why am I considering outsourcing this aspect of my business, is it because it is not what we specialise in, and will it be more efficient and cost effective to collaborate with someone else? Or am I simply avoiding aspects that are not what I love doing and do best, but are essential to developing a new business?”
He also recommends you ask the question: “Must I outsource an entire task, or can I select parts of it which would not compromise my overview as a managing director?”
And finally: “Can I work with the potential company I am considering partnering with to find the correct balance and make sure that the communication and data flow is efficient enough to keep the necessary control mechanisms intact?”
Mistake 3: Keeping your prices too low
Customers are looking for a fair price, but it’s not always a good idea to offer a cheap quotation in order to compete for new clients. If you undercut yourself, by only charging enough to cover your materials and labour costs, you’ll find it difficult to really grow your business.
Solution: Jeff Kasfikis of Big Bean Construction says: “There is no point being cheap if this affects the service provided and the end product. Some clients want the cheapest priced contractor, but also want for them to undertake the full top service and quality. It’s not feasible and that is why you need to issue a tight schedule of works, so accurate comparable pricing can be sought.”
To do a great job you need to be able to hire good contractors and spend time on completing the project to a high standard. Offer your services too cheaply and you won’t be able to afford either of these things. You might end up with unhappy clients, dissatisfied employees and an extremely low profit margin. Instead, look for potential clients who focus on quality and not just finding the lowest price.
Find out how to talk to you client about budget, without feeling awkward
Customers are looking for a fair price, but it’s not always a good idea to offer a cheap quotation in order to compete for new clients. If you undercut yourself, by only charging enough to cover your materials and labour costs, you’ll find it difficult to really grow your business.
Solution: Jeff Kasfikis of Big Bean Construction says: “There is no point being cheap if this affects the service provided and the end product. Some clients want the cheapest priced contractor, but also want for them to undertake the full top service and quality. It’s not feasible and that is why you need to issue a tight schedule of works, so accurate comparable pricing can be sought.”
To do a great job you need to be able to hire good contractors and spend time on completing the project to a high standard. Offer your services too cheaply and you won’t be able to afford either of these things. You might end up with unhappy clients, dissatisfied employees and an extremely low profit margin. Instead, look for potential clients who focus on quality and not just finding the lowest price.
Find out how to talk to you client about budget, without feeling awkward
Mistake 4: Not employing people
When you’re trying to grow your business there comes a time when you’re faced with the conundrum of whether to employ staff.
Ran Ankory says: “In a small business at least in the beginning, the owner normally tries to be at least three different people at once – the entrepreneur with the large scale vision and drive; the manager who keeps it all organised and running smoothly; and the technician who is doing the actual work that the business is set up to do.”
Solution: So when is the right time to get help with one of these roles? After all, by adding the wages of just one person you’ll have two people to support and therefore have to double your revenue. But if you don’t employ staff you won’t be able to take on extra work in order to grow.
Bridge the gap by taking on an apprentice who will grow with your business, or use subcontractors as a stop gap until you have enough work to pay an extra person’s salary. If you’re worried about the administration involved in paying someone’s salary, you could delegate this task to an accountant or bookkeeper.
When you’re trying to grow your business there comes a time when you’re faced with the conundrum of whether to employ staff.
Ran Ankory says: “In a small business at least in the beginning, the owner normally tries to be at least three different people at once – the entrepreneur with the large scale vision and drive; the manager who keeps it all organised and running smoothly; and the technician who is doing the actual work that the business is set up to do.”
Solution: So when is the right time to get help with one of these roles? After all, by adding the wages of just one person you’ll have two people to support and therefore have to double your revenue. But if you don’t employ staff you won’t be able to take on extra work in order to grow.
Bridge the gap by taking on an apprentice who will grow with your business, or use subcontractors as a stop gap until you have enough work to pay an extra person’s salary. If you’re worried about the administration involved in paying someone’s salary, you could delegate this task to an accountant or bookkeeper.
Mistake 5: Failing to give a quotation
It can be frustrating for homeowners when a renovation specialist doesn’t give an estimate for work they’ve enquired about. So if you want your business to stand out, it makes sense to be one of the firms who does takes the trouble to offer a quotation.
Solution: Even if you’re too busy and don’t need the work, it will pay off in the long run to give potential clients a quote. They’ll appreciate that you’ve made the effort, which will set you in good stead for any later projects.
A business management tool like Houzz Pro will enable you to create detailed templates for quotes and estimates, so you can quickly put them together and send them over to potential clients.
Tell us…
What would you include in this list of business growth pitfalls? Share your tips in the Comments section.
It can be frustrating for homeowners when a renovation specialist doesn’t give an estimate for work they’ve enquired about. So if you want your business to stand out, it makes sense to be one of the firms who does takes the trouble to offer a quotation.
Solution: Even if you’re too busy and don’t need the work, it will pay off in the long run to give potential clients a quote. They’ll appreciate that you’ve made the effort, which will set you in good stead for any later projects.
A business management tool like Houzz Pro will enable you to create detailed templates for quotes and estimates, so you can quickly put them together and send them over to potential clients.
Tell us…
What would you include in this list of business growth pitfalls? Share your tips in the Comments section.
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Depends upon the nature of the business and what the definition of "growing your business" is. The above may be relevant if you want you increase volume, but that's not aligned with every small business's goals. What we're shooting for quality over quantity? Whilst the intent of the article is good, wonder (doubt) if who writes these articles has actually experienced small business in this industry first hand. In this game, working on people's renovations, it's quite personal/human scaled type of business, and I'd say smaller scaled business can do the "people thing" far better than "corporate" scale entities. Form a business perspective, the smaller you are, the more flexible you can be. The bigger you get, the more staff you have, the hungrier and harder the "beast" becomes to feed. It becomes more mechanical and corporatised. Businesses take on more work just to make ends meet, but does it get executed to better quality? Nope. Is more growth in terms of volume a healthier option for both people in small business, and the Homeowner? Well, not necessarily.
And as for "It can be frustrating for homeowners when a renovation specialist doesn’t give an estimate for work they’ve enquired about...." that's a lengthy and complex discussion point in itself
I agree with the comments about not making quotes in preference to estimates, with an estimate it must be clear that you are not making a quote and often is can be obvious that some people are just fishing around fir a cheap deal. Almost without fail they will be terrible to work for.
Apprentices are not cheap, they have to have time off for college and studies, they can't do a lot of work without supervision and will cost you more time than a skilled worker.
It is important if a business is expanding to have an idea of how big you want to be, there comes a point where an expanding business has a lot of staff but is making the same or less profit than when smaller. At that point it takes quite a jump to pass that point and become bigger and more profitable but often at the cost of losing the personal approach with clients. If you reach that point you have to stop and decide what you want.
Probably as much as 60% of my work in the past came from other businesses who I had dealt with or worked for previously, working wuth larger companies or for them as a subcontractor can be excellent as you develop a relationship with them and to some degree have cushion between you and the client.
Trade associations, Chambers of commerce and trade shows can all be useful, in the old days it was always the golf course and the 19th hole for many in the building trade.
I agree with both comments....I would rather give a personal approach and stay small than the corporate and loose what our services are all about...I think its how you balance everything and hope you have a steady flow of work. Building a good relationship with clients comes with years of experience which isn't easy to hand over to someone like an apprentice.