Does Your Business Have What It Takes To Grow Over Its Next Hurdle?
You might think that once you’ve managed to secure your portion of the market and started to make enough money to turn a profit, even to invest back into the business, that you’re safe and secure. However, that’s just not true. If a business fails to continue growing, then it will inevitably start to shrink, instead. The majority of businesses that fail within the first two years do so because they didn’t have what it takes to grow. So what, exactly, does it take?
Objectives and key results
Why is your business getting bigger? To avoid stagnation? That’s a good motivation, but it’s not going to set a direction that leads to genuine growth. You have to find the goals that your business is growing towards. This might mean opening a new location, offering a new service, and so on. These are known as your OKRs, and they include both the objectives that set the direction for the company and the team, as well as the key results, which is how you measure how well you’re hitting those objectives. Without a clear direction, it will be hard to motivate your team to reach the further growth you will need.
Enough space to host it all
You might not necessarily need more office or workspace to grow your business successfully. The two points after this one will determine if that’s the case. If you’ve identified that you need more property for your business, then you should look at your options, whether you buy, rent, or build. Some businesses can get around this by incorporating remote workers into their team that don’t need physical space, but that’s not a solution that will work for everyone. Figure out if you’re going to need more property, what kind of property you’re going to need, and what the most cost-effective way to get it is. First, you need to figure out if you need the people and the equipment that would necessitate more space, to begin with.
An expanded team you can rely on
In the vast majority of scaling operations, creating new positions is going to be crucial. Growth means more work, after all, and you’re not likely going to be able to put it all on the shoulders of your existing team. Streamlining your hiring process, whether it’s via working with recruitment agencies or improving it internally, is likely to become important as you are likely to start hiring more people than you have ever before. However, you shouldn’t simply buff up each part of the team with new members. Hire strategically. Some teams, like a design or research team, might not need more members while, for instance, sales might. Know where you should and shouldn’t hire and plan the team’s expansion carefully.
The equipment to do the work
If you are welcoming new members of staff onto the team, then it’s likely that you’re going to also be in need of new equipment and furniture. List down the physical resources that you need and budget out those scaling costs. Pre-owned and surplus stores may help you to cut some of the costs, but you don’t want to spend so little that you’re going to have to spend even more on replacements and repairs as time goes on. When it comes to your IT, it may be worth working with a managed services provider to ensure that you’re covering all of your needs well and not creating a system that’s too inefficient.
An increased branding and marketing presence
It’s entirely possible that you got to your first major growth step without needing to invest too much in marketing at all. However, don’t believe that will be the case forever. Word of mouth can only travel so far. If you are setting higher growth targets than you can currently find with your existing market, then you need marketing. You can greatly increase your reach and start to build the kind of brand recognition and trust that helps convert people who might have heard of your brand before but never quite made the step to convert. You can balance your marketing budget with more cost-effective organic marketing methods, as well, so you don’t need to start spending like a much bigger business just yet.
The infrastructure to keep it all running
While running a smaller business, you might be easily able to handle all of your own management, HR, and payroll needs. However, as the business grows and the team expands, this will quickly grow out of your control. You don’t want to spend all your time working within the business when you could be working on it with a bird’s eye view. Getting caught up in the day-to-day stops you from spotting the growth opportunities and making broader strategic moves. Working with HR and payroll firms and finding management material within the business is going to be of great help. From this point on, you’re likely to need good managers to ensure you still interface with your team with spending too much time in the front lines, so to speak.
A strong supply chain
If you’re in retail, manufacturing, or moving goods of any kind, then not only are you going to need to deal with an increased burden of products to move, but you might need to think of new ways to store and move them, too. For instance, your new products might require new specialist packaging or refrigerated storage space. If you’re not currently equipped with the warehousing and transport that you need to handle your increasing supply needs, then it might be time to look at outsourcing your needs to a fulfilment service. As the business grows and stabilizes, you may invest in absorbing these functions back internally, but you should prioritize handling existing demands first.
Managing your growing expenses
As your team grows, you move into larger premises, create new outsourcing partnerships, and so on, your finances are going to become increasingly complex and multifaceted. This is doubly true if you have to borrow funding for the scaling operation. It’s essential that you take the time to create a budget and estimate how much you’re going to need for each part of your scaling efforts. You may also want to consider hiring a bookkeeper or accountant, if you haven’t already, to make sure that your increasingly complicated finances are organized and that you always have a handle on the financial health of the business. Without it, it’s easy to lose your grasp and start sliding into debt.
The funding to make it all happen
If the points above make anything clear, it should be the fact that scaling is going to cost you a significant amount of money. Some will be able to raise the funding they need on their own and to reinvest with past earnings, but it’s very likely that you will need some help on the way. Equip yourself with a business plan and a thorough accounting of where your funding will go, then look at the different options you have for raising. Traditional options like banks and angel investors will still be the most effective option for most, but alternative options like peer-to-peer lending, equipment financing, and crowdfunding may be worth considering, as well.
Growing a business isn’t easy, and once you’re over that hurdle, you have to start generating enough new revenue to get a return on that investment. Make sure you take the time you need to prepare with the tips above.