For small businesses, growth can be a major challenge. It takes time and resources to grow, and both are often in short supply. So how can you make it happen?
The statistics don’t lie. 73% of failed business go belly up because of a lack of vision. “A lot of businesses fail while pursuing potentially good ideas, because they take on business opportunities that lead them away from their goals,” notes André Menand, Director of Specialized Business Growth Services with SAJE, an organization that empowers entrepreneurs. The takeaway? Smart growth management is essential.
In very small businesses, entrepeneurs generally fly solo or have few employees. Financial resources are limited, which is why it can be so hard to expand. “To grow, you need to find opportunities that pay in terms of both time and money. They need to be opportunities that you can assign to other members of your team and monitor with relative ease,” says André Menand. In other words, you need to find your “cash cow!”
This could be a lucrative contract for a regular client that keeps your business humming along without increasing your workload. The idea is to free up some time and money and then spend it on business development. André Menand explains that about ten years ago, SAJE took its experience with entrepreneurs and used it to develop a growth model, the “Growth Wheel”, for very small, small, and medium-sized businesses..” “The wheel identifies the various steps that most companies take in order to grow. There are four different phases, each with its own challenges. The first is market penetration—generating as many sales as possible to keep your company alive and pay yourself,” says Menand.
The second is making your sales count: being more selective and concentrating on the most profitable clients and products. At the same time, you need to optimize your process in order to reduce costs and increase your profit margin.
In the third phase, businesses will maximize their sales by analyzing the needs of their clients and improving how those needs are met, sometimes by developing related products. “An example would be a lawn care business that teams up with a subcontractor who specializes in painting patios,” says André Menand.
In the fourth and final phase, entrepreneurs can pursue growth in new markets. This can only be done if the business is running smoothly and the maximum number of operational tasks have been delegated to employees and associates. “It’s only when you’ve reached that point that you'll have the time and resources to develop new opportunities,” says André Menand.
Anabela Neves, Senior Manager for Montreal’s SME Market with National Bank of Canada, specifies that having a strategic plan—one that’s based on a solid business model—is key to successfully navigating growth. “It’s the foundation of any business initiative: How do I position myself as an entrepreneur? Where do I want to go with this business? When you follow a strategic plan and update it regularly by incorporating goals achieved and obstacles encountered, you set yourself up for success,” she says.
According to André Menand, one of the most common mistakes made by entrepreneurs who fall short of their business objectives is failing to clearly define a vision for their business activities, which makes it impossible to develop a clear business strategy. “When you know where you’re going, you’ll know which business opportunities are worth exploring and developing and which are best left untouched,” he says.
Failing to properly analyze opportunities can lead to decisions that ultimately prove fatal to a business. “An entrepreneur might sign a contract with a retail giant, for example. Extremely tempting, but also potentially crushing,” says Anabela Neves. Major retailers like Walmart, Costco have very high product quality standards and often take a long time to pay invoices, which can stretch a company’s finances too thin. “Ninety days can be a very long time to wait for a cheque. Without a safety net, your company could go under,” adds Neves.
Being a smart entrepreneur means doing your homework before leaping at an offer and staying level-headed when faced with a big shiny contract. The secret to balanced business growth? Don’t rush into anything or make impulse decisions. Ask yourself if it’s the right opportunity—and the right timing—for your business.
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