Key considerations when deciding how to grow a business
When considering how to grow a business, it’s important to get the right foundations in place before rushing ahead. Growing a business without a sound base or a solid plan can be detrimental to the business and have the opposite effect of growth.
There are some key factors to be considered before embarking on business growth.
Is your business right for expansion? – Some businesses just aren’t right for growth, and might not benefit from an expanded operation. Unless economies of scale can be achieved to allow for higher profit margins, or the business environment is right (for instance, are your competitors expanding? Is there a higher demand for your product or service?) then growth might not be the right path for your business.
Think about required resource – It’s a catch 22 situation, as you may not want to recruit staff that might not be needed right away, but having the necessary resource in place to facilitate growth is crucial. Upscaling an offering and then not delivering will lead to failure. Outsourcing certain functions or using freelancers could be a good short term option until growth success can be more accurately gauged and then planned for.
Expanding business premises – If your business sells goods and requires storage for stock, consider how expanding would affect your storage needs. Having adequate stock to meet demand is essential in order to grow. Equally, if your business is service-based and requires more staff to grow, expansion of premises might be needed to accommodate additional people, and have some wiggle room for further growth. Future-proofing growth is important to avoid further upheaval along the line.
Financing growth – In an ideal world, an expansion would be funded using the cash flow in the business. If this is the case, it’s important to ensure there are enough funds to facilitate the expansion whilst keeping enough in the kitty for the business to weather any storms. Outside funding can be sought if required, and with an array of alternative lending sources now meaning business owners don’t have to consider the bank as their first port of call, it’s worth considering borrowing to make that leap.
Managing impact on customers – If concentrating on growth might affect your service offering to existing customers, it’s important to think about how that can be effectively managed. Losing customers on which you have built your business will be counter-productive to growth plans.
There are many elements in considering how to grow a business, and any business owner looking to take the next step should think long and hard before jumping straight in. Seeking professional help can often be a wise investment. A business adviser may help you identify opportunities you may not have thought of, as well as help you avoid potential pitfalls.
Need more advice on how to grow a business? Give us a call on 01827 54944.