Successfully Managing your Small Business Growth : BULLETPROOF BUSINESS 3
The world of business planning is obsessed with growth. Do a search on the internet and there are over 160 000 references to the term "small business growth" alone. Yet successfully managing growth still remains a critical challenge for small and medium sized businesses. Poorly managing growth is a sure fire way to send your business broke. To make your business stronger, and more bulletproof, you need a clear and practical method for planning and managing growth in your business. In this article we will outline some key points you need to consider when developing a growth management system.
Before we get started take a moment to write down your business goals for the next 3 years. What's that? You're not clear about your goals?
What level of growth is required to achieve your goals?
The first thing to do is look at your sales or revenue goals. Where are you at now and where do you want to be at the end of each financial year for the next 3 years?
Now calculate the percentage shift in those targets each year. For instance, your current turnover might be $500,000 per annum, and you would like that to increase to $800,000 and then $1.5 million in the following year. This is a fairly common scenario and may seem achievable until you start looking at the percentage shift these figures represent. That is, 60% growth in 12 months then an additional 88% growth in the following year.
What levels of growth has your business achieved to date?
If you have been in business for a few years look back on your historical data and see what levels of growth you have achieved in the past. How do these percentages compare to your projections and goals for the future? In most cases people are aiming for a dramatic leap in the level of growth they are achieving year-on-year. No doubt you have been working hard to get the business to its current level of success. Perhaps you have been enjoying 20% or 30% growth each year. Is it really possible to take the business performance to a completely new level? Clearly you will need to be doing things differently in the business.
What will you do differently?
If you want your business to achieve an increased level of growth then you will need to change the way the business operates. What changes would you need to make for growth to be possible? Add staff? Add new facilities? Upgrade your technology? Remove bottlenecks in your processes? Again carefully consider what is required and if it is even possible to make these changes in the timeframe you desire. Typically there is a time lag between when you make a change and when you get the benefits of that change. For instance, you may be able to add a staff member next week but it takes them 3 to 6 months to become fully productive in their role. How does this impact your plans and timelines?
Will your market feed your growth?
It's one thing to know how you need to change your business operationally but you also need to carefully consider if there is actually the market opportunity to feed growth. Why do you think you'll be able to sell more in your marketplace or that people will spend more money with you? Do research and be very clear about how you're going to engage you market to increase sales.
What will your cashflow look like?
Any growth plan needs to involve an in-depth conversation with your accountant about cashflow. Once you have clarified your goals, operational changes and sales and marketing strategy take you plan along to your accountant so they can help you map what the cashflow implications might be. Your cash position will ultimately decide what is possible in terms of growth. If you start spending money to make changes quicker than your cash position allows your business will keel over.
Set Yourself Up for a Win
Having read through all of these pointers you might start to feel that your business growth plans should be put in the "too hard basket". Our key message and principle behind managing growth is set you and your business up for a win. Aim for practical levels of growth rather than overly ambitious "shoot for the stars" targets. If you do want to go for substantial growth targets then make sure you have the plans and resources in place that we have described and manage that growth in the logical, methodical manner.
You might also like to read:
Small Business Websites: 10 Steps to Success
There are all sorts of websites out there, and clearly some of them are working much harder than others. How can you be sure your website will be a champion? The key is website planning and s..Read More