Three Strategies for Business Growth
Starting a small business requires creating a business plan, raising capital, finding space, and opening the doors. That alone may have taken months, if not years to accomplish. Once the ball is rolling and operations are running smoothly, it may be time to think about growing the business.
The fact is that all hard work that’s been done to create a solid foundation and achieve operational efficiency, means now your business is ready to grow. But to achieve growth, you have to plan for it. And it’s never too early to start planning.
Business experts offer three strategies for small business owners to learn about and consider for taking their companies to the next level.
1) Cement a Solid Foundation
Companies may appear to be doing well, with orders coming in and products and services going out. A business owner might start to feel comfortable with his or her operations, but needs to not rest on their heels. In order to achieve organic growth in their industry, owners must determine exactly how well or what improvements need to be made to their business.
Two main aspects of the company that need careful consideration are your IT efforts and margin growth. Due to the significant cost associated with information technology systems and cyber security, owners need to assess how to handle the demands of this area. As sales grow, CRM systems and cyber security protocols need to be properly implemented and maintained. This may require hiring dedicated IT staff members or outsourcing to a company that acts as your organization’s IT department.
It’s important to track margin growth as well, because good sales don’t necessarily mean good margins. Higher costs associated with labor or materials can decrease sales margins. So before moving ahead by competing harder in your market, complete some essential cost-containment exercises to experience improving margins first.
2) Buy Growth
Fast track growth through acquisition. This is a way to increase market share and gain economies of scale, which can quickly change the growth potential of your company. Business experts suggest these tips for acquisition:
- Develop a team of professionals with different skill sets to help with business identification, value assessment and negotiations. This will also allow the business owner remain focused on his or her own business at the same time.
- Do due diligence on any prospective target to spot any conflicts of interest, identify potential negotiation issues, and evaluate the merit of the deal.
- Create a post merger plan to implement during the first couple of months after the integration. Include communications to share your vision, manage expectations and motivate employees.
3) Grow through Diversification
Tough competition in your neighborhood? You may need to grow in new geographic markets, product areas or industry sectors. This strategy requires planning and preparation to address any knowledge gaps (which are reasonable to expect) and to mitigate any risks associated with entering into a new market or product area can present.
In order to align any new movement with company goals, selecting the right location or market becomes very important. Find and utilize reliable data to compare markets and locations. You need to be able to objectively analyze financial and non-financial elements to make an accurate decision.
And in terms of financial considerations, risk assessment must be looked at for both the short-term and the long-term. Having enough cash for the initial investment is one thing or even borrowing may be fine, however, the key is to maintain good cash flow during growth so as to not put a serious strain on your current business.
These three strategies offer owners new opportunities and the ability to take their businesses to the next level and position themselves for something truly bigger.
Source: Business West. Planning for Small Business Growth: Three Strategies to Hit the Next Level. PP2.