In this article, we are going to talk about how to grow a small business.
If you don't know me, my name is Caya. I'm one of the founders and the CEO at Slidebean- a venture-funded, profitable, multi-million dollar startup.
One of my proudest achievements is having led our marketing and growth teams since the company was funded back in 2014. As a CEO, you have to get involved in everything, inevitably. But it's been the marketing and growth departments that have become one of my favorite tasks as part of running this company.
If you've seen some of our previous videos, you've seen me talk about traction.
Now you understand why I value traction so much. It's not only about getting the metrics you need to raise your next round of funding; in the end, funding is just a means to an end: having a bigger, more profitable business. It's growing your customer base and retaining those customers, that REALLY counts to a successful company.
Alright, so in this article, we are going to be covering:
Growth at the early stages
Basic growth tactics
The Growth Marketing or Growth Hacking mindset
Other topics that we will cover in Part II of this article:
Building a marketing team
The basics of SEM (Google Ads) and Social Media Marketing
So, even though most of our customers are other business (B2B)- we don't do a lot of 'traditional' sales. Our customers come to us through marketing, not via outbound reach. It's a B2C (Business to Consumer) kind of customer acquisition.
So if the type of business you have requires a long sales cycle, then this article will only cover the 'demand generation' part of your process. Sorry.
Ok, enough intro- let's get started.
How to grow a small business
Growth at the early stages
If you are just starting your business, figuring out your growth is, well, tough. There's little money to spend, the product is still early or unfinished- and convincing people to join or to pay is harder.
So here are some basics before you even think about growth:
GROWTH = PRODUCT
At this stage, your growth is not only related to your marketing, outreach, or sales efforts but to the product itself. If you are just starting up, then your product will probably be far from perfect. You have to understand that the stuff you learn as you try to position the product should impact its roadmap.
So DO NOT DO NOT hire an agency (for now)
Company growth is something that you need to figure out yourselves at this stage. The person who is looking at the website conversion rate should be in the same room as the person who designed the landing pages, and the person who is picking out which features to develop next.
This means that one of your founders or one of your very first few hires should be the marketing/growth persona. Like I said, I was that guy for a large portion of our company history, while my co-founders focused on the product. And yeah, we were in the same room, about 24/7.
Growth costs are not an expense
I own a marketing agency back in Costa Rica, and a large portion of our customers come to us thinking of marketing as an expense. They have a budget they are willing to 'spend' in marketing.
Marketing is NOT an expense; it's an investment. If you measure your efforts correctly, you should be able to determine how spending $1,000 in a campaign will yield $3,000. If you know these numbers are correct, then spending (I mean investing) $10,000 instead of $1,000 is a no-brainer because you know for a fact that it will translate to $30,000.
We'll revisit this in our Unit economics section
Finally, be prepared to spend money
Back in 2013, when we started Slidebean, we were able to acquire our first 5,000 using mostly (free) social media. Quality, shareable content went a long way, and it was enough to build an audience that eventually converted to our product.
Forget about that. As a company, you have to pay to play in social media these days. It's an extremely competitive space, every single brand is trying to compete for attention, and Facebook is greedy. The actual organic reach of a page these days is less than 1%, which means that if you have 100,000 followers, less than 1,000 of them, on average, will see anything that you publish.
While you might be able to have early wins in 'newer' platforms like TikTok, or 'niche' audiences like Reddit, soon enough you'll find yourself on the mainstream platforms, competing for attention and being forced to pay for those impressions.
More importantly, marketing is a trial and error game. Some of your experiments will fail, and the faster you can run more tests, the faster you can figure out your growth plan.
It's not free. Few companies can get away with free organic reach. So yeah, get your wallet ready.
So, in summary, if you are an early-stage company,
Learn to do this yourself- either you or one of your co-founders should absolutely own your communication.
Be prepared to experiment a lot, and set aside some money to do it. Once you find a channel that works, double down on it.
When talking about marketing, your unit economics are the metrics that determine if your campaigns are profitable or not.
Some basic concepts here:
CAC: Cost of Acquisition
The cost of bringing in a customer. If you are calculating the CAC of a specific campaign, then you should do Campaign Cost (divided by) Number of Customers. If you are calculating your average, broad CAC, you can also include the cost of your growth team or the platforms and tools that your team used.
Cost per Sign Up or cost per Download-
For many businesses with trial periods or freemium business models, a sign-up or app download is different from a (paid) customer, so you should keep track of both.
Finally, the Lifetime Value:
The average revenue that you expect to make from a single customer:
On a SaaS company, this is calculated using your retention estimation or churn.
On an eCommerce shop, this is calculated using the average order size, the average margin that you make from that order, and the % of customers that make repeat purchases.
The most basic rule of marketing is that your LTV should be higher than your CAC. Depending on the industry, you might aim for a 2x or 3x on your CAC to LTV ratio.