Business growth is a fine art. If you grow too fast, this will put pressure on your cash flow and can make your business vulnerable. Jonathan Cowan, Commercial Product Director for the Small Business Division at Sage UK, explores the key areas business owners need to consider to prepare for growth, or to decide whether growth is even right for them at this time.
Before considering growth, you need to be sure that you are plugged into the market opportunities and trends that surround your business and are able to take advantage of these, whether it is an emerging technology that may transform your industry or a new way to gather intelligence and engage with customers, such as social media. So if you are a manufacturer or retailer, the introduction of 3D printing is something you could be monitoring, to see how it could help you to offer new services and streamline your supply chain.
Take the time to really understand your market, and assess if conditions are right for you to expand. If you are entering into a sector that is not traditionally your firm’s area of expertise, then you need to be sure there is an opportunity. Extensive research is vital. You also need to keep an eye on what your competitors are doing in your market space. Are they pulling out or are they strengthening, investing and gaining business? Such signals can give you a good indication to the health of the market and – critically – the timing of your plans.
Secondly, you need to analyse the health of your business and complete an audit of your strengths and weaknesses, assets and vulnerabilities in order to validate whether your firm is well placed for growth. Do you have the hunger for growth and are you prepared to embrace the extra work and risk that is required to make this a reality? Inevitably, growth will bring challenges, but when done well the long-term rewards far outweigh the short-term pain.
One thing that cannot be overlooked is staff resourcing. How will you support this growth internally? Have you recruited recently, bringing in new energy, drive and skills that will help to support your expansion?
Another, more obvious trigger for growth is if there is capacity to sell more or new services to your existing customer base. Are you currently turning away work? Do you know how much extra work you could be getting? Having an idea of the amount of excess work you could be taking on, given resources, can signpost that it is time to expand.
Being aware of what is going on inside and outside your organisation is crucial, but once this has been considered, having a robust plan is fundamental for delivering long-term, sustainable success. The plan should consist of three key stages and considerations:
- Do you have access to the capital needed to enable you to grow? It is important that you consider investment and funding for your expansion, making sure that you have the finance in place for the stock, staff and premises needed for your business to grow.
- Do you have the winning idea, and are you sure how it will work in a larger/different market? Fantastic ideas in one market aren’t always well received in another, so make sure that you plan for alternative scenarios and research the appetite for your product or service in another market. Social media offers a cost-effective way to test ideas among existing customers and to gather intelligence on the new markets you are considering.
- Do you have the internal expertise to carry out your expansion plans? Checking you have someone with the expertise and specific skills for the market is crucial to success. If you don’t already have such a person involved in your organisation, then do you have a recruitment strategy in place that will enable you to get the insights and knowledge you need?
Making sure you have a robust plan in place is the most important thing to consider when thinking about if you are ready to grow. There are a few different tools you can use to make sure this plan is comprehensive, including a simple SWOT or PEST analysis (a quick search online will yield lots of examples). With proper planning and consideration, it is possible to ensure your business is well placed to achieve sustainable growth for the long term. Growing your business can be incredibly rewarding and profitable, so plan well and success will follow!