Ready, Set — Grow!
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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 positive — or very positive. More than half said their businesses were poised for significant expansion. So how will they — and you — make that happen?
It’s one thing to expect to grow your company. But it’s another thing entirely to get from here to there. The following commonsense guidelines can help you achieve your aims:
Identify growth goals. Growing a business is like any journey: It helps to know 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 10 years? Your target will help determine the actions you need to take.
Develop a growth strategy. After you’ve identified your goals, consider the options available for meeting them. What mix of existing and new customers, product lines, businesses and distribution channels is most apt to take you where you’d like to go? For instance, will your company grow organically, or look at acquisitions? Your strategy will guide investments of money and resources.
Fine-tune existing operations. Before your company expands, make sure its existing business operates with consistent stability and profitability. That way, management can safely focus greater attention on growth initiatives.
Implement solid processes and controls. Start-up ventures may be able to get away with a freewheeling lack of organization, but larger, more established businesses require greater structure. Without 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.
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.
Stay current with the latest technology. A growing organization requires technology that can accommodate a greater volume of business, so transactions can proceed smoothly and efficiently. Regularly develop, maintain and update your technology to minimize the chances that snafus will interrupt progress.
Here are some further ongoing actions that will 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 impede efforts to gain their future business. To minimize 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 hiccup 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 requires employees who will help it move toward its goals. Growth demands hard work, so employees must have passion and dedication. And determining when to add staff is 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 difficult for even the most talented and dedicated owner to handle everything personally. Delegating some functions is key. This fact highlights the importance of hiring 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 is inevitable as a company grows. But management needs to continue to communicate with the company’s customer base. This will enhance the focus on customers most important to your organization’s sustained success.
Manage risk. Failing 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 profitable, sustained growth. But without ongoing strategic planning and communication, it’s easy to miss changes in your business or in the market that might prompt necessary modifications to your company’s business practices. Your accounting professional can help you identify ways to achieve your growth goals.