Guide on How to Manage Business GrowthPublished on 16th September 2020 2020-09-16T11:00:00+00:00 - Last update on 17th September 2020 2020-09-17T19:20:40+00:00
Your start-up has now established itself and the phone is ringing with potential new business. Revenue is increasing, profits are coming in and you’re making a name for yourself among your competitors.
That initial worrying period when you were not even 100% sure that your start-up business was viable is over. But you may not be able to relax just yet.
Growing your business can be every bit as much of a challenge as getting it off the ground in the first place.
“The start-up stage was hard and meant plenty of headaches. But scaling comes with them too. They are different headaches certainly, but they are headaches all the same.”
You know your business works but trying to make it do much more, and still only have the same amount of time to do it in, can be every bit as difficult as the first handshake and the first sale.
Maintaining your high level of service and overall customer experience actually becomes harder to do as your company grows. You’ll work hard to get to scale, but then you will find that when the market changes, it’s now harder for you to shift with it.
You’ll find that you have two or three times the workload as you put on more business, but the working day is no longer and that there are physical limits on what you and your team can do.
Being inconsistent with your service-level agreements (SLAs) as your business develops can have detrimental long-term effects on its success. So now that you have mastered business set-up, how can you manage business growth?
Watch the money
Keeping your finances in check is vital at any stage of your business' development. It’s all too easy to get complacent when your profits are rising but you’ll put yourself at risk of mismanaging your finances. The faster a business grows, the more important it is to plan future financial decisions.
Take time to look at your finances, and realise that the financial models that served you during your start-up phase need to be redrawn. With growth, revenue levels, cost and overall cash flow change dramatically.
You may be making more sales and more money – but you will be spending much more too. You’ll run into many unforeseen costs, such as broken equipment, the need to hire new employees or an unanticipated opportunity that requires you to act, which of course means spending money, quickly.
It’s easier to deal with business costs and limit the number of financial surprises if you plan.
You need to set benchmarks, forecast your business’ upcoming finances, profits and sales, and stay organised. You may also need additional investment. A fast-growing business needs capital behind it. New stakeholders will be much more likely to invest in your company if you have strong cash flow credentials.
Above all, keep a tight rein on your cash flow. Just because your business is bringing in cash does not mean it is profitable, and good supplier management and stock control are vital – you want to free up money for growth, not have it tied up in outstanding debts or existing stock.
Weekly financial monitoring and forecasting soon becomes essential – keep a close eye on what is coming in and what is going out of your business.
Funding your growth
Business growth does not just happen - and although it should, in theory, be possible to fund growth organically from the profits you make, in practice, it very rarely is.
So, for example, you might require a second production machine to help you deal with demand. You may not yet have paid off the first one and a new machine will mean a large investment before it is installed and starts paying for itself. If you wait until you can afford the machine you need from your profits, you waste time – and precious opportunities which may not come again.
There is a similar story if you want to bring in another member of staff.
The answer is, of course, to increase your borrowing and pay back the loan when your new machine or staff member is already working for you and helping you generate additional profit. As a business that now has a record of success, even though it may be a short one, this round of borrowing will be much easier, and probably cost much less than it did when you were a struggling start-up.
It is simple to understand that as your business grows larger it will require a larger level of funding to keep up with new demands and run day-to-day operations.
A Working Capital Finance loan can supply you with the supplementary funding needed to accommodate new orders, build inventory, update your production equipment, expand your office space and hire additional team members. There are many different loan options available, so it’s imperative that you get expert help to find the right type of loan for the and with terms and conditions that fit the needs of your business.
Build the right team
As your business expands, you will need to have the right people around you to support you. It is not just about plugging a skills gap or simply finding someone to do the job as fast as possible. It is about recruiting people who will fit into your company’s culture.
Getting the right team is essential. The employees you hire make the difference between success and failure for your business. Regardless of the products or service features and benefits you want to offer, without the right team to provide them, your business will simply not thrive. Hiring employees that don’t fit in with your current or desired work culture will inevitably lead to poor performance and decreased levels of job satisfaction for all – and you will find yourself looking at the time and costs of recruitment all over again when you have to replace your unsuitable hires.
Your team should reflect your vision of your company and represent the values, beliefs, behaviours and commitment that make up your business culture - which is precisely the thing that may set it apart from your competitors.
To grow a business effectively, you must be able to trust the people around you. Growth can stagnate if, as a business owner or manager, you insist on overseeing every little detail. Allow yourself to step back from the day-to-day running and leave it to the people you have brought in. It gives you a chance to see the bigger picture to focus on business growth and development opportunities.
Once you have a great team in place, work at retaining them, ensuring your employees feel valued and that their roles and responsibilities stay fresh and stimulating.
Know your market
Have a strategy for growth
Growth does not just happen and, if it does, it will not be sustained unless you have a strategy to drive and support that growth. Focus on your strengths.
As your business grows, you need to leverage these strength. It’s essential to capitalise on factors that make you stand out from your competitors and identify and focus on your target audience and their needs. Engage and entice your target audience with benefit-oriented marketing content, special offers, informative events and services that highlight the strengths of your business and connect the customer to your brand.
Above all have a strategy for your growth.
A growing business needs to be supported by a robust business strategy. Without it, your growth could simply stop at any time and you will have very little chance to do anything about it. Spend time thinking about what makes your business tick and what you’re good at, and try to understand the key factors:
- Understand your growth: It is vital to understand what the factors are behind your growth. What has sets you apart from the competition? What’s your differentiator? Is it cost, quality, location or something else?
- Understand your potential: How much more can you grow? How much more do you want to grow? Do you want to run a very large business, or would it be unwieldy, and doomed if the market changed? Creating a mission statement can be useful, as it will nail down your objectives.
- Understand your limits: You need to be realistic about what you can achieve. If you don’t have the resources or support in place to take on a huge contract or big international order, then don’t take it on. It is better to be honest with a potential new client rather than accept the work and do a bad job on it.
- Understand your goals: Having clear goals will help you take your business forward. You cannot just say, “I need to increase sales and cut costs”. Be clear about how much you want to increase your sales by and the particular areas where you want to cut costs. You may need to set targets and make those goals measurable. Exactly how many sales do you want? When do you want them by? What level of revenue will you expect from them? You need to be clear in your objectives, and making them measurable will let you be clear if you have reached them or not. Set yourself a specific timeframe. Work these timings into your business plan and stick to them.
Know your growth market
The final part of any growth strategy is to understand your market. Do your research and get a picture of how your customers behave and what they want. Remember, business conditions change constantly. You will need to do this on an ongoing basis. It is useful to do a SWOT analysis, where you assess your own company’s Strengths and Weaknesses, and then identify Opportunities open to you and any threats you face in the market that you serve. This will help you to identify a niche in your market.
Safeguard your intellectual property
If you’ve worked hard to establish a brand or product, you can’t have a competitor swooping in and copying you. Take time to get to grips with your intellectual property rights and ensure you trademark your product name and logo, and patent any new inventions or products. If unsure, it’s worth speaking to a legal professional.
Funding to scale your business
Getting the right funding to keep up with your business’ development is critical. What might have been successful when your business was smaller might not be as effective now.
The scale of investment in your business a year ago - when it could have been half the size - will be a drag on your growth rather than a support. For example, you may need to bring in new people, new machines and even new premises to keep up with the same high levels of service. It's crucial that you are aware of the new set of risks and opportunities presented to your company as well as your incoming and outgoing cash flow.
Most importantly, put goals and deadlines in place to stay on track for further growth, including any necessary financing requirements.
At Rangewell, we can work with you to help you access the funding you need as your business grows. We know all the lenders in the UK market and we can help you find those who are most appropriate for your needs - and help you with the application process. We can even help you determine what type of funding is most appropriate for your needs - and ensure that you approach the most competitive lenders to provide it.
Plus, our services are free.
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