After trading for 3 years, we reached £3m turnover. We had several considerations when taking our business to the next level. First, we were around 18 months away from regulation. Having built the business by cold calling, our route to market had to change. Second, we had taken the turnover/profit to its limit, based on our model at the time. It was time for change and change we did.
We wanted to have a multi-channel marketing strategy. This required considerable planning, research, and a fair amount of courage as we embarked on a journey of unprecedented growth. We obtained different approval of finance for growth from our bank and strategic lenders. We really planned this in detail because, to a certain extent, our funding lines were disaster recovery lines. We used a small percentage of those funding lines. In fact, our bank was not used at all to fund the growth.
Over a short space of time, we added various types of marketing and, where we could, involved our staff in the process, so much that our TV advert had our staff as the cast. It created a real buzz when the staff were involved in helping us grow the business. We went through a vetting stage of advertising agencies and production companies until we found ones we could work with.
Around this period, we continued with outbound telemarketing and introduced direct mail. Each type of marketing had its own telephone number and source type on our systems. This meant all statistics could be broken down by TV channel, direct mail, and individual data set. At one point, we had over 100 different telephone numbers. We could clearly identify our return on investment by individual segments of the marketing channels.
One of the most fundamental errors I see many companies make is not reporting in enough detail. It has to be drilled down to the deepest amount. You can never have too much detail on management reporting, especially at the start of a new method.
Although we had planned and researched before engaging in these campaigns, we were only dipping our toes in until we started to see the return on investment. From these statistics, we designed our key performance indicators. We quickly saw that direct mail with telemarketing overlaid was working very well, so we started to scale this area quickly. TV remained flat, so we kept that at its initial investment level.
We had some spare resources when we started this campaign, but once we saw the returns, we embarked on a recruitment drive in line with the increased investment we were putting into our marketing.
We were seeing a return on the marketing spend, so we started to test some online marketing. Within 6 months, we had grown to nearly 100 staff, but continued to increase our growth, albeit slower, based on the key performance indicators reviewed everyday.
After several months, we were not getting a return from TV advertising, so we dropped it. Online advertising was breaking even, so we kept a minimal presence there. The growth we achieved was helping us build an ever increasing database, which we continued to service and make tremendous returns from. At our peak, we were spending over £500,000 a month on marketing with 130 staff. It resulted in our turnover peaking at £15m and profit at just under £2m.
What I learnt most about this is detailed below. Luckily, we got most things right.
When starting anything new, you must plan in detail and have several return on investment options, ranging from good to bad.
Sales growing doesn’t necessarily put more bums on seats in all areas. Look for efficiencies.
You can never have too much detail when producing management reports.
Continue to review your product range and diversify if need be.
Focus on your destination. That vision is vital.
Your next level of management need to cope with growth, so invest in your people.
Involve all staff in the process and ensure they are incentivised to sell more.
Ensure steady, sustainable growth.
Exit your business at its peak. As I reflect on this experience, it’s made me so much wiser – it could have been so different….I believe without a doubt that the experiences I had will be invaluable to anyone growing their business, and give them the best chance of maximising their profit. Considering the difference it can make to your personal wealth when it comes to an exit, this is something I doubt you could afford to miss.
Having built and sold my SME, I now work with SMEs. I understand their model by embedding myself in the senior management team so I feel the heartbeat of the business. All areas are covered, but the four questions that we work on solving are: How do I grow my business?, How do I achieve client excellence?, How do I make more profit?, and Does my business model deliver?
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