Small Businesses have a desire to grow – grow their sales, customer numbers and enter new markets. However unless you have adequate resources and a clearly defined strategy, then growth can lead to the demise of your small business.
There are many fine examples of small businesses that’ve exploded in size as they possess high growth potential. Angels invest, banks lend, crowds fund and external resources are ploughed into helping those companies achieve their growth potential – but not every small business has such significant growth potential. So before you contemplate growing your company, consider the following advice.
Resources are one of the key factors to consider when growing a small business which include:
- Machinery & Technology
The obvious considerations are money, manpower, premises and equipment – but one factor often overlooked is the skills required to achieve growth. As a company grows the hierarchy, management and positions change so you need to consider if you have the staff with the right skill set to take on new roles. What skills do you need? Can you train existing staff? Where can you find the staff with these skills and how much will it cost you?
Draw a list of all the above 5 key resource areas and calculate what resources you need if you achieve a certain level of growth – you’ll often find that right now you simply don’t have the resources available to facilitate your growth plans.
Remember where you come from and who helped your company get to where it is – your existing customers. As a small business you can afford to dedicate more time and attention on each individual customer, but as you grow your time will be spent elsewhere.
To achieve growth you might want to explore new markets and offer new products in an attempt to grow your customer base. Stop and think about why you won those customers in the first place, what attracted them to you and why do they continue to be loyal customers?
Launching new products to new markets leads to a fundamental shift in your business model, so be mindful not to alienate your core customers at the expense of obtaining new ones.
Grow too big too quick and you’re gone – you must grow sustainably. If that means it takes you longer to achieve your growth objectives then so be it.
To borrow or not to borrow? I have this romantic notion that commerce would be far more sustainable if companies didn’t borrow, but the reality of the situation often slaps me in the face. Borrowing is often the only way small businesses can fund new machinery, employ new talent or make essential repairs. However if you can avoid borrowing and achieve the finances you need over a longer time period, always choose sustainable organic growth.
You need to pay interest – every month and on time which increases the overall amount you pay to achieve the same results. An element of borrowing is outside your control. Interest rates may be at a record low but they will increase in the next year or 2 – yet again increasing the risk and cost of borrowing.
Do you think my advice hinders or helps growth?