Forward thinking in business: What next when your business starts to grow
In business, you might find yourself in a position where things are going well. You have plenty of customers, lots more demand for your products/services, and substantial revenue being generated.
In short, your business is taking off!
This is a very good place to be – you are not only being successful, but you also are presented with the opportunity for growth.
The question soon becomes ‘how are we going to manage it?’.
Growth should be the goal for all businesses, but often this is not overseen all that well. Poor planning, financial mismanagement and being under-prepared could have a significant impact on your business, to the point where it might collapse.
So, the way you facilitate this change is very important. This is why you should consider the following factors.
1. Be ready to commit
If you are serious about growing the business, you are going to have to commit to it.
This might mean taking on more responsibility, reassigning certain tasks to others and working longer hours every single day of the week. It will also require dedication and passion moving forward, as well potentially as a sacrifice in your home and social life.
So, you need to make sure you are prepared to do this.
If you are, you will also need to garner a collective ambition, and get emotional buy-in from your employees, when it comes to their commitment to making the expansion a success too.
2. Plan to scale
If you have not got one already, it is worth devising a clear strategy for growth in the form of a longer-term business plan.
To do this you will need to develop a vision of where you want your business to be. You will also need to evaluate market forces, industry trends, your competition and the demographics, buying patterns and behaviour of your target audience.
This plan should identify pathways for growth from existing customers, as well as new ones. It also needs to establish new products you can introduce, or markets you can trade in, as well as new competencies.
It must of course be S.M.A.R.T (specific, measurable, achievable, relevant, time-bound) and fluid, as it should have the ability to react efficiently and quickly to marketplace changes.
You will also need to ensure that sufficient capital is being set aside for growth. How the daily operation of your business will change. If your current location and facilities can handle the growth, and how you will go about recruiting and managing staff.
All of which will put you in a very strong position to move forward.
3. Understand your financial capacity
While devising your business plan you will need to have a firm grip on your financial management, because your vision of expansion can only be realised with capital.
Understanding your current accounting and financial capital is crucial as it will determine the extent to which you can grow.
Not only will it enable you to effectively allocate resources and capital. But it will also help you to predict how the impact of future financial investments will affect your profits. As well as facilitate the sustainable scaling of your business.
The more you grow, the higher your costs will be in terms of utilities, inventory, equipment, employees and possibly even rent. So, you will need to be sure you can cover this.
Understanding your financial capacity will also determine any need you might have in terms of raising capital from an equity investor or other types of financing like a bank loan, or a business line of credit.
4. Hire good people
In order to grow your business, you will need to invest in your employees as well as hire more good people too.
You will have to be clear on how many people you will need in your business moving forward and what skill sets they will each bring to your organisation.
Of course, this is not as easy as it sounds, and can often be a delicate balancing act. So, finding the optimum speed of growth is crucial.
Hiring too fast could end up with an oversized workforce that is difficult to sustain. While not hiring fast enough could mean you can’t keep up with your sales and might put your business under unnecessary strain.
One of the main keys to successful growth is that you need to formulate a deep understanding of the strengths and weaknesses of your business, as well as the opportunities in your market.
When building your team, especially your management team, it is also important to focus on specific functions, including the likes of sales and marketing, customer service, product development and finance, which are critical success factors in any organisation.
Where possible, hire new ambitious employees with strong leadership qualities, who are experts in their field. Create clear pathways of progression for them within your organisation and devise a fluid succession plan that will keep your employees committed.
Be aware that good people optimise customer experience too. Although they do tend to command higher salaries. So be sure to factor this into your planning and budgeting as well.
5. Modify your revenue models
To ensure successful growth, it is important to design your business model into a format that will help your business achieve long term profitability.
While your existing revenue model might be performing pretty well, you should not take it for granted. In Fact, to take your business up a level, you should look at how you can sustain and increase profitability, as the growth change happens, by increasing your profit margin and reducing your overall costs.
Always be on the lookout for opportunities that create economies of scale and embrace new technologies, and e-commerce, that can increase productivity and lower your overheads.
6. Growth technology and e-commerce
When your business begins to take off, it’s essential that you supplement your future endeavours with technologies that set you up for success. There are several tools you should be using to assist with the rapid growth of your business.
Many of these can help you set up processes that are integrated or automated, which therefore provides the platform for your business to scale.
Investments in cloud technology, CRM management tools and automated accounting tools are all good examples of technology that allow medium size businesses to grow at exponential rates.
Similarly for smaller businesses looking to expand, nailing down basic technology such as transactions and telecommunications will expedite and facilitate your growth. These technologies should be cost effective and look to streamline business processes first and foremost. For instance, the telecommunication systems and business numbers provided by Simple Telecom are an example of small investments in daily operations that can help your business grow faster and bigger.- the right software mix
7. Modify your corporate structure
As you plan to grow, you may need to modify your corporate structure, especially if you need to hire more people.
Essentially, this means changing the legal structure of your company to match the increasing demands of your business.
If your business is currently structured as either a general partnership or sole proprietorship, you may consider going public and becoming a corporation.
Alternatively, if you are adding several new employees to your team, you may decide to become a limited liability company instead.
It is worth talking to your accountant, or a legal representative to ascertain what structure will benefit you the most.
They will also help you understand any implication your business growth might have with regards to taxes, your intellectual property, contracts and liability. Especially if you will be expanding into new and/or overseas markets.