Ready, Set — Grow!
More than four in five business owners responding to the 2016 Annual Bank of the West Small Business Growth Survey said their business outlook for the upcoming year was either positive — or very positive. More than half of them also noted that their businesses were primed for significant expansion. So how will they — and you — make that happen?
It’s one thing to desire to grow your company. But it’s another thing completely to get from here to there. The following common sense guidelines can help you reach your goals:
Identify growth goals. Growing a business is like any other kind of journey, it always helps to know exactly where you want to go. Is your goal to double in size over the next five years, or to grow at a consistent rate for the next 5 to 10 years? Your target will help you to resolve the steps that you need to take.
Develop a growth strategy. After you’ve identified your goals, consider all of your options available for meeting them. What mix of existing and new customers, product lines, businesses and distribution channels is most likely to get you where you’d like to go? For example, will your company grow organically, or will you need to look at acquisitions? Your strategy will guide the investments of both money and resources.
Fine-tune existing operations. Before your company expands, be sure that its existing business operates with consistent stability and profitability. That way, management can safely place greater attention on growth initiatives.
Implement solid processes and controls. Start-up ventures may be able to get away with a freewheeling environment with a lack of organization, but larger, more established businesses generally require greater structure. Without such policies in place, employees might end up reinventing procedures, whether for training new hires or vetting new suppliers. Their actions could be inconsistent, leading to confusion and perceptions of unfairness throughout the organization.
Similarly, financial controls become increasingly significant as a business grows and the owner or executive team is no longer able to personally handle all transactions. A key area of control is to ensure that staff charged with processing orders and payments are not inadvertently presented with opportunities for fraud or dishonesty, due to lack of oversight.
Stay current with the latest technology. A growing organization also requires technology that can accommodate a greater volume of business, so that the company’s transactions can proceed smoothly and efficiently. Regularly develop, maintain and update your technology to minimize the chances that problems will interrupt your progress.
Here are some additional strategies that will help you to ensure growth over the long term:
Develop a reliable supply chain. A good supply chain makes sure products are in the right place, at the right time, at the right price. Failing to meet clients’ current needs will hurt efforts to gain their future business. To reduce this risk, check that your company’s suppliers can provide materials in the quantities you will need. If current suppliers are unable to do so, identify other vendors to fill in the gaps. Ideally, you can provide each supplier with enough business to negotiate volume pricing, without becoming so concentrated that a vendor issue or slowdown threatens your ability to fill orders.
Hire people who can advance the company’s growth. Just as a business needs technology and suppliers that can support its growth, it also requires employees who will help it move toward the goals you set. Growth demands hard work, so your employees must have both passion and dedication. Determining when to add additional employees can be a balancing act. Your company needs people in place who can foster growth. On the other hand, it’s important not to waste money by bringing on new employees before they’re needed.
Learn to delegate. As a business grows, it becomes impossible for even the most talented and dedicated owner to handle everything personally. Delegating some functions is key. This highlights the importance of hiring good people who can handle the responsibilities of a larger operation, and having in place a structure that helps them succeed.
Stay in touch with customers. Delegating responsibilities will be inevitable as a company grows. But management needs to continue to communicate with the company’s existing customer base. This will improve the focus on customers most important to your organization’s continued success.
Manage risk. Failure to protect against cyber threats, employee fraud, and other risks can devastate a company. Both solid internal controls and the latest technical tools are critical in these efforts.
Many business owners strive for continuous profitable, sustained growth. But, without continuous strategic planning and communication, it can be easy to miss changes that might cause necessary modifications to the company’s business practices. Your accounting professional can help you identify ways to achieve your growth goals.
Sidebar: Fostering Solid Relationships with Lenders and Investors
Growing a business almost always requires money, whether for hiring additional employees, new sales campaigns, additional inventory and equipment, or a larger space. These investments often are needed first, before the company receives payment for goods or services sold.
In order to finance growth, it’s important to develop relationships with outside sources of funding, such as lenders or investors. Discussing your current performance and growth plans with potential funders before you actually need the capital can minimize the risk that a lack of cash flow will hinder, or even halt, your company’s growth.
- As a result of rising facility costs, many nonprofits throughout …Read More »
- On December 22, 2017, President Trump signed the massive federal …Read More »
- By Angela Juvelis, CPA, Senior Audit Manager Many employer-sponsored 401(k) …Read More »
- Most of us will depend on defined contribution plans, such …Read More »
- How Can You Prevent Employee Fraud? One of the biggest …Read More »