After a year or two, when things have settled down and you’ve had chance to catch your breath, you’ll find your priorities switching. Assuming it’s no longer a question of day-to-day survival, you’ll be looking around to see what needs changing or refining, how you’ll find new customers, and how you’ll increase your profits. Can you find new and better value suppliers of the dry items you use in your special occasion cakes? You’ve saturated the local area with your sales of stained glass windows, so what about the next county? Is it time to add a new seasonal line to your soft furnishings collection?

Overtrading

But while you think about expansion and growth, you also need to guard against hitting the small trader’s ‘wall’. This is where the orders are flooding in too fast and there’s too much work for one person, but you don’t feel ready, either financially or emotionally, to expand. There’s not a straight answer to this one. Clearly it makes no sense to take on staff until you feel the time is right: on the other hand it doesn’t make any more sense to turn away business. If you’re in this position, the choices include:

• Taking on a part-time employee for a handful of hours a week before committing yourself to someone full-time.
• Sub-contracting some of your orders out.
• Reducing your number of orders by raising prices.
• If appropriate, aiming for a longer delivery time.
• Looking carefully at your time management. Could you be working more efficiently?

 

There’s no disgrace in staying small, and many make the deliberate choice to do so. Taking on staff involves much more paperwork and legal responsibility, and you may decide that rapid growth is not why you decided to become self-employed in the first place.

Whatever you decide, you need good, solid information to base your decision on: don’t risk everything on a dodgy artistic instinct. So that means monitoring how much you’re earning, calculating how much it’s costing you to produce your goods or services, and then working out how much working capital you have available.

Going Into Profit

It could take months or even a year or two to go into profit. This isn’t necessarily bad because in the early years you may decide that this isn’t your priority. In many cases, building up a regular and loyal client base may be more important, especially if you’re providing a service.

If for example you’ve set up a tailored walking holiday company appealing to the affluent empty-nesters, you’ll need time to put together a customer list because the process of selling a holiday and it being taken can take months, unlike a pair of shoes or a pot where the customer buys it, takes it home and uses it half an hour later. You also need time to make the contacts for accommodation providers, transport providers and so on.

What you’re doing is sacrificing profit in order to establish your client list, and gambling on reaping the benefits of repeat business in the later years.

How To Increase Sales

You have three basic options:

• Sell more of the same thing to existing customers. Persuade them to take larger and more expensive organic veg boxes.
• Find new customers in the next county for your veg boxes.
• Sell different things to both old and new customers by diversifying into jams, chutneys and relishes.

 

Market research and customer feedback should show you the best way forward. Is there a demand for larger veg boxes? How many customers would pay for a special ‘premium’ selection? Is it cost-effective to send your boxes into the next county? Would it be more profitable to find a single distributor who could take on the boxing and local distribution himself? Are customers telling you they’d like the chance to buy local and homemade chutneys and relishes? If so, how much more would they be prepared to pay over and above what supermarkets charge? Is the presentation of the jar important to them? And so on.

These three basic options on increasing sales can be applied to virtually any type of business.