For a startup service business with limited capacity, simply keeping the service capacity occupied can often be enough build up the capital to needed for later growth.
There is always a tension in micro business startups - when you are selling you are not earning and when you are earning you have no time to sell.
It is therefore better if you can avoid having to sell and just earn all of the time.
Referrals from one customer to another solves the sales problem as well as providing assurance to the new customer you can be trusted.
Social media can be a very effective medium to encourage referral sales especially when selling to the general public - eg for something like painting and decorating.
For an early stage micro business set up on the basis of the technical skills of the proprietor, then referral marketing is a logical approach to obtaining new sales. The painter and decorator who gets a professional job done without charging too much may be able to build a reliable stream of work based on reputation and referrals.
Increasing sales may not be his concern, in fact he may get to a point where he has to defer work or turn it away because he has reached the limits of his physical capacity.
In this instance sales growth is very much connected to capacity and how the business is structured. To make the sales grow, the proprietor with the good reputation has to add personnel and step back increasingly from the detailed technical work. As sales depend upon his personal reputation, being less involved in delivery brings great risk which will have to be addressed.
Also, as the number of people in the business increases, referrals alone may not be enough to increase sales to cover the additional capacity. So the technical wizard who has never had to sell, now has to become a salesman.
Something that seemed so simple becomes really very complex very quickly. This is the reason why many sole traders stick with the work they know and walk away from additional work and income. For them, the increased complexity of the larger business is not for them as it takes them away from the work they love. This is their choice.
Adding personnel and building a professional operation based on the good values that got them started can help immunise business owners from personal risk and give them a stable business able to provide a decent income without damaging their personal life. It can also build an entity that is saleable in the future when the right time comes.
