Overcoming the current challenges and unlocking new growth for small and medium businesses requires a collective effort – from banks, industry bodies and government.
Report
July 3, 2013
Growing your business successfully
Growth is the engine that drives a business - but it’s also an ongoing challenge that brings many businesses unstuck. So how can you ensure your business is set up for growth? Dr Richard Shrapnel, Executive Director at Pitcher Partners, shares some practical suggestions.
Managing growth sounds like the very best kind of challenge but many businesses struggle to do it well. Dr Richard Shrapnel, Executive Director at Pitcher Partners, says there are many opportunities and pitfalls to manage as you navigate a path to success.
Don’t lose sight of the reason for your success
What is it that your customers like most about your business? Whether it’s the quality of your product, a particularly user-friendly online environment or reliable service, you need to identify your strengths and ensure these stay central to your growth strategy.
“It sounds obvious, but many businesses flounder because, as they become larger and more complex, the owners lose touch with what made them successful in the first place,” says Shrapnel. “Of course it’s important to be as efficient as possible and to do things for minimum cost but it’s just as important to be effective, and that means continuing to give your customers the value they’re looking for.”
Surround yourself with the right people
No-one is going to feel exactly the same way as you do about the business but people who are excited by your vision, believe in the business and feel good about the work they do are much more likely to be innovative in their thinking and actively support your business growth.
“From the outset, you should be building a team of people capable of managing and running the business without you,” Shrapnel continues. “This is the way you build capital value. If your business would collapse if you weren’t there, then there’s nothing to sell.”
As soon as you take on your first employee you must switch from managing yourself to managing other people. This requires a particular set of skills and, if you don’t have a management background, a mentor or adviser could help you to avoid common pitfalls that can inhibit growth. For example, the way you reward your people will shape their behaviour but many business owners make the mistake of rewarding the wrong thing. If your customers love the way you take the time to talk through their purchase decisions it could be very dangerous to introduce a commission system that encourages your sales team to rush through the process.
Maintain a flexible structure
Every business has its own lifecycle and opportunities for growth will vary according to its stage.
Your organisational processes need to be flexible enough to accommodate growth in areas as varied as sales, profits, systems processes and capability without losing the fundamental vision and culture of the business.
“A business plan which clearly sets out the direction, alignment and focus of your business will underpin your strategy for growth,” says Shrapnel. “It can also be a very effective means of communication, a way of showing your partners, bankers and employees exactly what you want to achieve and how you plan to achieve it.”
Monitoring financial performance is critical and accurate, timely information will help you to identify opportunities. Most businesses need a financial model that includes cash flow, profit and balance sheet and looks ahead for at least three years.
“Your competitive strength will ultimately determine how successfully your business grows,” says Shrapnel. “Clearly communicating your strategic objectives, structuring your business to focus on client value, monitoring the right metrics and developing the most appropriate culture for your particular business are all fundamental to developing that strength.”
8 tips for successful growth
- Never waver from giving your customers more of what they love about your business.
- Focus on effectiveness as well as efficiency.
- Recruit people who are enthusiastic about your business and learn how to manage them.
- Ensure you’re building capital value.
- Take care to reward the behaviours you want to encourage.
- Develop and maintain a business plan which clearly sets out the direction, alignment and focus of your business.
- Monitor financial performance.
- Ensure that your strategy is flexible enough to accommodate different areas of growth without damaging your vision and culture.
More from NAB:
