Which lever could you pull to fuel your business growth this year?
With Australia's economy still stuck in the long grinding cycle, small businesses are increasingly concerned about growth. According to MYOB's latest Business Monitor, 42 per cent of those surveyed believed the economy will dip over the next 12 months and almost hald (41 per cent) expect sales to be flat for the next 12 months.
This echoes the findings of Vero's SME insurance Index 2016, which also found 42 per cent of respondents are concerned about a potential economic downturn. What's more, 47 per cent are very worried about increasing costs and just over a third are apprehensive about increased competitor activity.
This is not the case across all market segments, of course. With over 90,000 new units due for completion in the next 12 months, mainly in Sydney and Melbourne, strata managers are more concerned with staying on top of the exponential growth that might follow high density construction.
And even in professional service markets such as accounting, financial advice and insurance broking, we're seeing signs of optimism.
"This is the busiest time of the year for brokers, as most policy renewals take place in the second quarter of the year. And we're hearing, from both insurers and brokers, that the continued reduction in premiums has finally eased," Eoghan Trehy, National Head of Insurance Broking for Macquarie Business Banking comments.
He agrees they have "sufficient grounds for cautious optimism" if they have a plan in place for growth and the capabilities to execute it.
"There are five different levers they can use to trigger growth in the current environment, and these apply across other sectors as well," he explains.
For every business owner who does something a little bit better, there’s a pay off.
1. Technology beyond disruption
For a growth strategy to be profitable, it also needs to be efficient and scalable. Given concerns with rising costs, that means being able to do more with fewer resources – and investing in a new technology platform may be the answer.
“This could be as simple as implementing a CRM like Salesforce to share customer information more effectively within the firm – and improve client relationships by engaging with them more effectively,” says Trehy.
It could be an operational platform to manage your workflow and generate more meaningful reports to support smarter, faster business decisions. Or it could be a platform that short-cuts the process for clients.
“’Insuretech’ businesses are looking for ways to go out directly to the client,” Trehy comments.
“There are some really cutting edge ideas out there – I think we’ll see peer to peer insurance emerge as a way to manage a specific type of risk. It’s early days, but the world is moving that way so it’s worth considering what that approach means for your business.”
You may not want to invent a completely new channel, but you still need to find a way to stay relevant and add value.
“You want your clients to think ‘I couldn’t do this without their help’ because the power is in their hands now. So how can you make their experience as frictionless as possible? Do they really need to fill in all this paperwork? Or could they do it on their phone or device? We’re seeing growing demand, especially from younger clients, for the ability to do business on different channels.”
2. Trust your people to deliver
Trehy suggests treating your staff as if they were your clients. “How can you engage them better? What do they really want?”
The most recent Pulse survey results indicated more insurance broking firms are offering less tangible staff benefits – such as the flexibility to work from home. “It’s more about the output, not face time at a desk,” Trehy comments. Training can play a big part in this too – helping people realise their potential by continually developing their skills.
And one smart hire could end up being the best growth strategy around. “One of our clients brought in a broker with a fantastic network and the skills to bring in new business. They generated an extra $1million thanks to his contacts. He was attracted by the freedom of working for a smaller firm – and he’s probably on track now to be an equity partner.”
3. New products that add real value
If you're thinking about diversifying into new revenue streams, start with one simple question. What else can we provide that adds value to our current clients?
“This often happens quite naturally when a client moves into an adjacent sector and you follow them,” Trehy observes. “But you could also identify a natural add-on – for example, we’ve seen a broker provide back to work support services as part of their workers’ compensation offer. Or, offer additional complementary skills within the business such as legal support or financial planning, which has the potential to add value to the client experience.”
This can't be done on a haphazard basis. “You need to execute it well, with the right people to deliver. It’s not just a case of thinking ‘let’s not let that additional revenue walk out the door.’”
4. A taste for acquisition
Looking for a quicker way to diversify? Buy the best business in that market.
“You don’t want to have to reinvent the wheel, so you just buy that expertise in. The challenge is, there’s no shortage of potential buyers in the current market – but not many firms want to sell.”
If you don’t want to compete with opportunistic multinationals and larger groups ready to pay a higher multiple, look for individual talent instead (see point 2).
5. Get smarter with marketing
Rather than increasing your marketing spend, could you use your current channels more effectively?
“We’ve seen an underwriting agency use their online presence to generate more traffic by creating an online training program that offers CPD points for completion. It’s a great way to bring people into the business and softly sell their products,” says Trehy.
With so many more channels available, marketing may seem too complex to manage. But there are many platforms out there to help you automate your efforts. For example, Hubspot or Marketo can help you simplify email campaign management and also provide a more consistent client experience.
“Your first step is to find a more efficient way to get things done,” says Trehy. “Automate a manual process. Because for every dollar you cut back in costs, your business value will increase by a significant multiple of that – up to six or even eight times for insurance brokers.”
“For every business owner who does something a little bit better, there’s a payoff,” he concludes. And that payoff is not just in short-term revenue growth – it can positively impact the value of your business as well.