How do you grow your business? Maybe that’s not the question to start with. Instead, the first question small business owners need to ask is, Do I want to grow my business? And regardless of how you answer that most fundamental question, follow it with clear answers to a second: Why do I want to grow—or why not?
Intuitively, we believe that all small businesses want to grow bigger, and that every start-up dreams of being an Apple or Facebook. But a couple of years ago, two Chicago professors turned those assumptions on their ear when they released research findings on how most small businesses behave. The vast majority, they found, don’t expect to grow and, in fact, stay small during their entire lifecycle. And more than that, the majority of business owners reported that they wanted to stay small. They did not want to grow!
That’s why, when you’re feeling the pressure to grow your business, first decide if you really want to. If you don’t, it’s perfectly legitimate to continue to operate at any level you’re comfortable with.
But if you think growth may be in your future, ask yourself another question before building and launching your growth plan: Why do you want to grow your business? Business consultant Carrie Wilkerson says this is important, because in answering, you’ll discover your purpose. Keeping your purpose in focus will help you navigate the inevitable ups and downs of growing your business. Wilkerson says that this could also evolve over time. And, she says that being clear about what fuels you—that certain something that keeps you feeling passion and excitement for your business—is never about the money, status, fame or notoriety that growing your business might bring.
So now you’re ready to go full-throttle into growth mode. Northwest Quarterly (Northwest Chicagoland) suggests that business owners consider five things to better understand how to approach business growth prudently in today’s challenging environment:
- Know your goal: Set an end and develop the means. Among other things, make sure you have a sound business plan before developing and implementing a marketing plan. Tap into resources (e.g., bankers, marketers) that will help you articulate tight objectives.
- Do your homework: Understand your risks, rewards and challenges. Know what you don’t know. One way to start is by describing in detail why customers value your business. In other words, what’s in it for them? Continue to revisit your goals to make sure you’re headed in the right direction (for you). Dig for information on taxes, insurance, transportation, workforce, utilities—anything that could impact your bottom line. Enlist professional help to do an honest analysis of all factors.
- Set a budget: Manage your variables and debit; monitor your cash flow. Forecasting revenue, cash flow, debt and financing needs are more than just numbers and require detailed and expert financial analysis. Get your CPA involved early and often through this process: Your budget is the defining piece in your plan for growth.
- Target your audience: Don’t sing to the crickets. Don’t assume that customers are going to discover your new products or expanded business on their own. Reach out to them. Tell them about your growth and why they should care.
- Anticipate a reaction: Can you handle the extra traffic? Can promotions be too successful? Yes, if you aren’t prepared or can’t satisfy the bigger demand. Part of the forecasting process needs to be factoring in how promotions will affect your traffic, inventory and cash flow. Conversely, if your promotions are falling flat, find out why and adjust accordingly, whether that means changing your message or offer. If you’re completely missing the mark with audiences, you may want to consider taking more drastic measures, such as rebranding.
Click here to read the full article, which is full of useful insight and great examples of business owners and business advisors who have undergone this five-point analysis before launching a new growth phase.
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