CONQUERING BARRIERS TO BUSINESS GROWTH

The essential guide to Starting Up & Growing your Business

Happy New Year to everyone, and here’s wishing your 2016 will be a high growth and highly profitable year.  By now you should have your annual forecasts and growth plans charted to manage your business success and reach for the stars.

If, however, your new year’s resolutions have not yet galvanised you into action, then my next series of blogs will help you take steps to ensure your business will Soar to new heights rather than Sink into oblivion!

The 5 Stages Of Business Growth

New businesses, especially those who have been trading only one or two years, have to smash through quite a few barriers, either real or perceived.  It’s easy to wing it initially, but as it grows and becomes more complex that won’t work for long.

Stage 1 – Start-Up

The start-up phase is definitely challenging, but exciting, as the new entrepreneur feels freedom for the first time, especially if you’ve been made redundant or left your job to “become your own boss”.

Entering the market can seem fairly easy for the uninitiated, or those who just have the sheer gut determination to break into the business world.  The first few months seem encouraging, although frantic setting things up, networking building a client base, getting a website, organising stock, premises – whatever is needed to run your business.

However, maintaining sufficient cash flow and turnover to invest back into the business, to get through the first barrier – is the initial stumbling block for most micro and start-up businesses.

Stage 2 – Growth

If you get over that first hurdle, you can experience a healthy growth curve.  The good times seem to roll with incremental annual growth, and your business starts to show some payback.  Pickings may be rich but a false sense of security can cause cracks to appear.

Where you have been comfortable actually doing, or providing whatever product or service your business is good at, it soon becomes apparent that as a business owner you need skills and knowledge in other areas of running a business for this to be sustainable in the long term.

Recruiting staff, maintaining the marketing plans, keeping the purse strings in check whilst still trying to get product out the door – all start to cause frustration, anxiety and stress, leading to disillusionment.  This isn’t going to be as easy as you initially envisaged. New skills are needed, and definitely more resource.

This is where you hit the second barrier and have to reposition your own role from Working in the business, to Managing the business.  Two very different things!  And this is where the business growth starts to sort out the wheat from the chaff – those who are still in “employee” mode to those who have a real Entrepreneurial spirit, and prepared to step out of their comfort zone.

If you do your research, disengage yourself from the day to day by employing people with the right skills to do that for you, you can then move the business to the next phase.

Stage 3 – Advanced Growth

Congratulations – this is where you can feel proud of yourself.  You’ve gained and applied the skills to manage the business.  Step back and reap the rewards, but keep your finger on the pulse, and your eye on the ball.  You can now focus your efforts on developing your staff, further building client and supplier relationships and working on the future strategies of the business to ensure its sustainability and profitability.

Stage 4 – Plateau

It may be a conscious decision, or life cycles (eg. retirement planning) may dictate the business reaching a plateau in its growth plans.  This can be a positive experience in allowing a younger business to consolidate its position.  Take stock and enjoy a period of plain sailing, but don’t get complacent.  Keeping in touch with your markets, the industry in which you specialize and ensuring employees, clients and suppliers are nurtured is a must to avoid entering Decline.

Stage 5 – Decline

This may be a conscious decision for some business owners looking to retire, or exit a business altogether.  However, the business will decline if not properly structured and invested in.  Key clients, suppliers and staff will start to leave and the business will eventually close.

Hitting Brick Walls

If you recognize yourself or your business position above, and feel that you’re hitting these brick walls, but not sure how to overcome them, then read on.  Over the next seven weeks I will be addressing the key reasons why companies start to fail.  I’ll be providing guidance and support as to how you can avoid the most common pitfalls and barriers that could prevent your business success.

Barrier 1 – You, The Owner

Your experience, knowledge and self confidence will be the key to your success. Does successful growth demand working harder or smarter? A typical owner-manager spends only 10% of their time on building the business.  Meddling and misspent time can be the key cause of business failure

Barrier 2 – Planning – The Key To Success

Your business can be everything you want it to be and more – if you plan for it. It’s a proven fact that those with a business plan perform better than those that don’t.

Barrier 3  – The Wrong Ojectives

Growing turnover often comes at the expense of profits. Rapid sales growth with low margins is not a healthy approach.  Greater profit can be gained with less work and fewer problems by focusing on carefully thought out objectives.

Barrier 4 – Muddled Marketing

Too many small businesses diversify too early and haven’t researched their markets well enough. Focusing on core products or services will achieve better results, and allow a learning curve to better understand your customers’ needs.

Barrier 5 – Information Chaos

Good information equals good decisions. Information chaos halts growth.  Getting your systems and processes right, from the start, is critical to managing a steady growth plan.

Barrier 6 – People & Change

You cannot grow your business without the help of other people. Continuing to run things as a small business as you get bigger doesn’t work.  Change management is key.

Barrier 7 – Money

Lack of financial strategy and poor control leads to a downfall. We’ve all heard that Cash is King, yet 50% of small firms have no financial budgeting process or sufficient controls to ensure a secure level of liquidity.

Next week we’ll start with You, The Owner, and what you need to be aware of as you grow your business, in terms of your own self-development, and pitfalls to avoid.

FURTHER READING

From Hamsters Wheel to Cocktails Around The Pool – Barnaby Wynter, January 2016