A business grows when it’s called upon to expand, to develop into the future. Whether a small business or an SME, if your business hits a market share cap in an industry or geographical area, it can no longer grow organically and has reached maturity. To begin to grow again you must focus on planning.
How to Plan to Grow Your Business.
The key to successful growth is setting clear business goals. You’ll also need smart management and the implementation of a strategic plan based on a solid business model. Following the progress of your plan will allow you to make the right decisions at the right time.
The main obstacles standing in the way of entrepreneurs are usually lack of time and resources. “Strategic planning exercises help prioritize. If growth becomes a company’s priority, managers will allocate the necessary resources to make the project a reality,” explains Pierre Bilodeau, Director of Business Development at National Bank.
4 Business Growth Strategies
There are many ways to grow in business. Your strategic plan allows you to choose the business strategy, or combinations of strategies, that best fit your goals. To facilitate implementation of these strategies you can consider technological innovation in business, making it possible to optimize certain costs, employee productivity and the quality of the service or product offered.
1. Repositioning and Efficiency
In reviewing your business positioning, you may choose to focus on your most profitable products or services. By calculating the income generated by an offer compared to its cost price, or consequent expenses, you could come to see that your profit is small. Eliminating this offer would allow you to capitalize on existing markets while improving your efficiency, without taking too much risk.
Structuring a growing business and optimizing processes also helps to reduce costs and increase profit margins. “I directly link business innovation to organizational efficiency,” explains Bilodeau. “If you’re able to be more efficient and move faster than your competition, you’ll get ahead. This can be done through the internalization, outsourcing or subcontracting of certain tasks.”
2. Acquiring Market Share
You could target new markets with an offer that is already functioning well at your company. Improving the quality of a service, changing its marketing or its price to reach new segments, are some avenues to consider in order to acquire market share.
If market conditions are favorable, you could also acquire a franchise or a competitor in your region or internationally, in order to reach new locations. “Acquiring a new business should not be the initial strategy,” says Bilodeau. “it stems from a desire to differentiate and must be part of the overall growth strategy of the company.”
3. Product Development
To grow when your market share has reached maturity, you could also offer new products or services to maximize sales to your current customers. After analyzing their needs, you could develop related or complimentary products to those you already offer.
Since you already have an established relationship with these customers, marketing this new offering may be more effective than targeting a new market.
You can also target new business areas by offering a product or service that is completely different from your traditional offering. Promoting new products in new markets, however, represents a double risk.
“You will have to focus on your distinctive key competencies. Build on the strengths of your company, to attack the elements that you are better at,” explains Bilodeau.
Who are the stakeholders in your company’s growth?
For the business development expert, in addition to effective planning, business growth depends on the entrepreneur’s ability to surround themself with the right resources, qualified staff and to ensure the quality of their suppliers.
From the strategic planning stage, you will be able to list the stakeholders in your growth, whether they are management, finances, human resources, shareholders or partners. Make sure you communicate your company’s positioning to them, take their reactions into account and anticipate their expectations so that they adhere to your growth plan.
At the beginning of your company’s growth, when demand is inconsistent or difficult to anticipate, making a commitment to subcontractors rather than creating new employment links may be relevant. With outsourcing, on the other hand, the quality of your product or service could be at risk. Bilodeau advises “to assign the tasks with the least added value to subcontractors to keep the added value in the company, with your employees.” If added value increases, you can hire new staff accordingly.
How to Finance Your Growth
Access to capital is essential in order to get your business growing.
“Growth needs profitability. You have to find the right balance between having enough cash to operate and reinvesting money to grow your business,” says Tony Aksa, Vice-President, Corporate Banking Partner at National Bank. “The watchword here is ‘balance’. Not keeping the profits generated by the company and ending up in a situation of underfunding is a mistake.”
Before you get started, assess, from a conservative standpoint, whether or not you have the resources and capital to support your current business without penalizing it during growth. “The idea of growth is great, but there is an undeniable period when there will be more costs than income,” says Bilodeau. “This period can be long, and it varies with each company.”
Obtaining a paying contract with a regular customer, that doesn’t require too much financial investment or human resources, could allow you to free up the time and money necessary to devote yourself to the development of your business.
In terms of investments, banks and other lenders can help you finance or refinance your projects based on growth and profitability.
Some Avenues for Successful Growth
Define your vision
Having a precise vision of your activities allows you to develop a clear business strategy. Knowing in what direction you are heading will allow you to recognize business opportunities worth exploring as well as those that are better left untouched.
Bet on Your Employees
“Make sure your employees have the capacity, energy and determination to meet your demands,” says Aksa. When an employer puts too much pressure on their employees, they risk becoming exhausted, especially in times of growth. “People don’t always realize that the value of a business depends on the value of its employees,” he continues. “Building a culture that respects and serves your employees is important, considering that they will be willing to go the extra mile during times of transition.”
Betting on your employees could translate into the implementation of benefit programs, a system of promotions and rewards, or diversity awareness, to name a few initiatives.
Respecting Your Business’ Culture
Remember, part of the success of your business is due to its core values. “If the discourse of your staff changes, you may have questions to ask yourself,” explains Bilodeau. “Are you missing out on the culture of your business?”
An entrepreneur who focuses on new growth objectives risks forgetting certain pivotal elements in the success of their business.
Weigh Your Decisions
The savvy entrepreneur must carefully analyze a business opportunity that presents itself so as not to make a decision that will ultimately be fatal. Growth that happens too rapidly can be dangerous to the survival of a business.
Signing a contract with a retail giant might sound like a tempting offer. However, the payment terms of large companies are very long and the requirements very steep. “Avoid promising deadlines or a volume that you cannot meet, and make sure you offer the usual level of quality,” advises Bilodeau.
Don’t Go Too Fast
All businesses aim for growth, but to benefit from it, it is essential to stay in control when things start moving quickly. If you are struggling to meet the needs of your customers, this is a clear sign of poor growth management. To continue to provide quality service to your customers, you’ll want to find the right pace for growing your business.
To anticipate risk, minimize damage, and stay in control, managing the growth of your business comes down to having a solid business plan as well as periodically monitoring and analyzing growth to adjust as your business expands.
A business expert can help you in your growth.