The UK economy’s instability has only exacerbated these issues, leaving many struggling to survive. In fact, research suggests only 27% of British SMEs managed to achieve growth in 2022.
However, with the right tactics and tools, there are ways to overcome these challenges and achieve growth in even the toughest conditions. In this article, we’ll explore three actionable strategies that can help businesses navigate the current landscape and thrive in the long term.
Striking a balance with your pricing structure
In today’s fiercely competitive market, it’s crucial for SMEs to establish a pricing structure that strikes a balance between profitability and customer demand. Begin by determining your bottom line, taking into consideration the cost of production, materials, advertising, and labour. This will ensure you avoid selling at a loss and will enable you to maximise your profits effectively.
Understanding your target customers is essential in setting the right prices. Consider factors such as their income level and willingness to pay. Experiment with low-risk tests, such as introducing new prices to a select group of customers and gathering feedback before making broader changes.
Some common pricing structures include:
- Flat rate: suitable if you’re offering a sole product or service – you set one price and stick with it
- Tiered pricing: works well if you have multiple products, where higher value offerings come with a higher price tag
- Pay per use: this model charges customers based on their usage, no more and no less
- Razor blade pricing: involves selling a core product and generating additional revenue through add-on products
It’s important pricing is dynamic and adaptable. Competition and supplier costs may fluctuate, impacting your profitability.
Top tip:once you find a pricing model that works for your business, you can introduce complexity through exclusive offers and loyalty schemes, similar to how coffee shops alter the prices of certain food items or popular drinks.
Perfecting your pipeline
To achieve growth, SMEs must focus on perfecting their pipeline – a methodical strategy to selling products or services. This consists of several stages that guide the customer journey and increase the chances of conversion:
- Lead generation: firstly, it’s crucial to attract potential customers. You can do this through effective marketing campaigns or initiatives such as offering free trials to create interest
- Lead nurturing: this stage plays a vital role in building and maintaining relationships with prospects. This is achieved through email communication, customer service initiatives and social media engagement
- Lead qualification: assess whether the prospect aligns with their target customer profile. A visit on your website does not guarantee conversion, so it’s important to understand the prospect’s potential to become a paying customer
- Closing a deal: once qualified, the deal closing stage occurs when the customer makes a purchase
- Post sale: activities such as ensuring customer retention and providing ongoing support, are crucial for fostering loyalty and encouraging future purchases. Research suggests 89% of consumers are more likely to make another purchase after a positive experience
Representative of your sales cycle, each stage mirrors a milestone in the customer journey. A well-oiled pipeline leads to more conversions, increased revenue and a better understanding of your customers.
Top tip: consider regularly drafting a report to track your pipeline’s health, focusing on metrics such as conversion rates, number of deals closed at each stage and even the length of the process as a whole. Keeping track will help inform future strategies and decision-making.
Optimising your technology
Seek software that drives productivity and efficiency. Automating repetitive tasks can save valuable time, allowing business owners and employees to focus on more important matters. Research by the Centre for Economics and Business Research reveals businesses that adopt automation-related technologies experience a 15% increase in productivity. For instance, IRIS KashFlow is a prime example of a software solution that automates compliance obligations for VAT and tax, streamlining administration processes for small businesses.
Top tip: when selecting technology solutions, it’s essential to choose scalable options that can grow and adapt alongside your business. Learning new tools can be time-consuming, so select tech that’s easy to learn and can integrate seamlessly with existing systems.
Unlocking business potential simply and smartly
SMEs face significant challenges in today’s business landscape, but with the right approach and strategies, these obstacles can be overcome. By addressing key areas such as pricing, pipeline management, and embracing technology that creates efficiencies, the path to growth becomes clearer and more attainable.
