Many would say advertising, many would say R&D, many would say cut your prices - I don't think any of these things will do 1/3 of what being a kind, decent, caring, passionate, and giving local business person will do for growing your business.

Think of the people you work with.  you have only good things to say about these people, right?  Well, put yourself in their shoes.  Is that what they think of you?  developing an excellent reputation is what will grow your business. 

Developing your excellent reputation does not just happen by chance - those business and individuals who get all the referrals have paid a price and continue to do so for that reputation.  When there is a dispute - solve it.  Even when it cost you time and money.  Make your customers and clients happy, and do it with a smile :)  I cannot tell you how many times I had to fight with a contractor to get what he/she said they were going to do anyway but never did - do you think I ever used them again - not a chance.  Do you think I ever referred them to anyone - not a chance!  Be proud to deliver exactly what you said in the timeframe you said.  Do that last one thing and you are already in the top 10% of your industry.

Lastly - be passionate!  If you are not right now with what you do - you better fake it - but that will only last until someone else in your field comes along with fire and passion for what they do, and they will gobble up your business!