6.1 Plan for Growth
Build growth into your vision and business plan
If you're going to dream, then dream big, because reaching one horizon always reveals another. That's why VISION and PLANNING exactly how to achieve that vision, are critical success factors in turning big dreams into absolute, veritable reality.
Planning for growth is vital. You need a vision of what you want to achieve and a plan to get you there.
Daring to dream pays huge dividends
Forecasting and planning for growth enables successful entrepreneurs to scale the business up without strangling it or running out of cash. And therein lies the key factor in effective growth management: cash!
Effective growth always comes back to the amount of cash that you have available in the business. Scalability is about the amount of money that you have in the company to invest in that growth. How, when and in what you invest your profits, are the core drivers of growth. With scalability, achieving balance is critical.
For example, a sales-generating business may have periods of exceptional growth. What's vital is how that upsurge in growth is handled. Over-investing is a common mistake made to cover growth. Unfortunately, if a few leaner months follow a period of growth, staff costs may need to be reduced. And what if you've taken on bigger premises to cope with the growth that you can no longer afford?
Stable and solid growth comes back to the all-important forecasting model and one key question: What are you doing with your cash and how are you reinvesting it? Think carefully about this question constantly as your business grows.
I'm often asked for advice on how to grow a business. Two particular scenarios concern me when entrepreneurs believe they are ready to expand. They can be summed up as two questions.
Q: I'm over-achieving sales targets. Does this mean I now need to double the size of my business?
A: No, it doesn't. Scaling a business up should be done in a piecemeal fashion. Look at a short-term small growth phase, even if you've had an upsurge in your business. Over-investment and over-committing financially can kill a growing business.
Q: We've had an exceptional sales period at Christmas. Should I take on bigger premises?
A: No. You should only consider an infrastructure rethink (more staff, bigger premises, increased costs) if you have a guaranteed income. Only if you win a contract that guarantees a level of income for a certain period, should you consider scaling up in this way.
If you don't have guaranteed contractual income, and upsurges in profits are seasonal or temporary, ensure that you:
- keep costs to a minimum
- absorb the profit
- then reinvest.
Reinvesting profit smartly is of crucial importance when growing a business successfully. You need to know how best to reinvest in your vision, and only scale up when you have profits that are sustainable, ongoing or guaranteed in a contract.
6.2 | Review performance to accelerate growth
When a business is finding it relatively easy to achieve the numbers and the budget forecasted, this shows stability. That's great. But, the successful entrepreneur won't stop there. That's the time to focus efforts on the areas that are working and outperforming others.
- Ask yourself: which area has outperformed other areas of the business?
- Focus on that area. Invest more in it to push growth even further.
- Accelerate!
Effective growth lies in putting your foot on the metal. The acceleration process is key.
Once you've got a good business, it's operating well and you're delivering, it's much easier to assess the incremental and percentage performance of each of those areas.
To accelerate growth:
- Avoid complacency and comfort levels. Sometimes, when everything is working out and results are being achieved, entrepreneurs can find an element of complacency setting in. Don't let that happen to you. Complacent entrepreneurs will be overtaken by their competition, just like the Tortoise and the Hare fable. Once all the indicators are being hit, avoid falling into a comfort level. Instead, keep up the momentum. Look at other areas. Look at how to enhance what you already have and build upon what's already working.
- Review performance. Monitor the business, set out clear goals and have an area operator plan. Each area of the business must be properly planned to ensure the team knows the specific direction, targets and required results.
- Be analytical. Study, uncover strengths, innovate. Review the drivers in the market, do your research, understand the opportunity, study your competition through SWOT [strengths, weaknesses, opportunities, threats] analysis. Find ways to be even more innovative, then add to it incrementally.
- Continue to focus on results. Give everyone involved clear objectives and expectations. Match and track your performance against the competition. Uncover what you're doing right. Communicate this with your team. Being results oriented brings clarity to the goal for everyone involved.
- Build intrinsic value into your business. Strive to become the number one company in a niche market place. Get the edge over the competitors. If you have intrinsic value, you become a potential acquisition target.
- Be confident and persevere. Inner self belief is like a foundation stone under the tallest building. In order to grow, successful entrepreneurs harness the power of their belief to have the courage of their convictions and make things happen. On the journey to success the successful entrepreneur will learn, absorb feedback and stay focused. Perseverance and confidence are the driving forces behind exceptional growth. Keep on keeping on. Stay determined with the right attitude. Don't give up until you've done everything possible to achieve what you set out to do. Persevere!
Once you've got a good business, it's operating well and you're delivering, it's much easier to assess the incremental and percentage performance of each of those areas. You can then reinvest more in that area to accelerate the growth because it's a proven business model.
6.3 | Build influential relationships
Maximise growth through great relationships
Relationships with staff, partners, suppliers and financiers are the cornerstone of any successful business. Nurturing and building relationships is absolutely fundamental to successful growth. One of My 10 Golden Rules is INFLUENCE, because there are times when entrepreneurs need others and when others need entrepreneurs. As such, relationships should work on a win-win basis.
Three ways to build relationships to maximise growth:
- Add value to your partnerships and relationships. When you look at your customer, don't keep thinking what you can sell them or what service you can give them. Think about their customers.
- What are their customers looking for?
- What can you give your client relationships in terms of added value?
- Which tools can you provide them with to do an even better job for their customers and their customer's customer?
Make it a win-win situation. You've got to invest in those partnerships, as much as they invest in you. Each party has got to see value in the relationship. Successful entrepreneurs never lose sight of this critical success factor.
- Invest time in all key relationships. Spending time developing key relationships with bankers, partners and suppliers, is absolutely crucial. This helps those people to completely understand your business. If you've already got a strong relationship with these people, they can see the business moving in the right direction. You've given them the confidence to support you. Consequently, when you go back to say you need more money or additional help and resource, that line is open.
- Keep people regularly updated and in the loop to give them confidence. A lot of people make this mistake. They go and borrow money, and the next time they speak to a bank or a lender is the time when something's gone wrong and they need more. Keeping your bank manager regularly in the loop gives them confidence. If they have confidence in you, they'll support you even further. The result? Faster growth!
6.4 | Reality check: are you raring to grow?
So you have successfully launched a business - but can you take it to the next level?
- Have you got solid financial reporting processes in place? It is vital to keep cash under control. Cash is king and making your money work for you is fundamental if you want to survive and grow quickly.
- Have you arranged proper financial support for your cash flow forecasts?
- Have you pinpointed how to scale growth effectively? Is growth in profits contractual, long-term and guaranteed or seasonal and subject to dips? This will determine whether you seek to minimize costs and absorb profit or reinvest profit (and incur additional staff or premises costs).
- Are you reviewing company performance systematically and consistently on a day-by-day basis? If you read your figures properly you really can see into the future of your company.
- Are you maintaining momentum? Focus on areas that are working, invest in outstanding areas and accelerate growth.
- Are you building and maintaining relationships? Nurture win-win relationships and think outside of the box to add value for your customers. How can you help them better serve their customers? Are you investing time in relationships with bankers, partners, suppliers, customers and staff to create confidence and loyalty?