Public discourse around the economic recovery has focused relentlessly on start-ups. The government has been keen to demonstrate its commitment to entrepreneurs, and has spent a lot of time talking about the importance of new businesses to the British economy.
But what about the thousands of exciting firms that are already established? What of the countless innovative firms looking to expand? These businesses often find themselves without the support they need, particularly in today’s climate of depressed funding.
Growing a business in this environment is a major challenge. We have compiled five key questions to ask yourself before you begin the process, in order to help you start on the right track.
1. Is it the right time for growth?
Your first priority should be to determine whether or not it is the right time for your business to begin expanding. Expansion at the wrong moment, or at too fast a pace, is one of the most common reasons for the failure of otherwise viable companies – and it is therefore important that you fully understand your existing circumstances.
You can begin to assess your current position using the SWOT method. This process requires you to identify your Strengths, Weaknesses, Opportunities, and Threats. Use these as the cornerstone of your plan for growth, considering ways in which you can mitigate the weaknesses and threats, and take advantage of the strengths and opportunities.
2. What are your expansion options?
There is a range of ways in which businesses might choose to expand. Your strategy will depend on the nature of your business and the market in which you operate.
You might, for example, choose to grow your business by expanding your market share. You could achieve this by increasing your sales volumes to existing customers, improving your customer retention, or attracting new customers from your competitors. Alternatively, some firms choose to enter new markets altogether, while others investigate acquiring other businesses.
3. How will you finance it?
Finance is a pressing concern for businesses at every stage of their lifecycle, but it becomes a particularly important consideration during periods of expansion.
Growth comes at a short-term cost, and it is important that you are confident in your ability to meet that cost. There is a range of potential options available to growing firms. You might, for example, consider equity finance, an arrangement under which you raise capital by selling a stake in your business. You might also investigate factoring or invoice discounting as a way to raise money against your existing invoices.
4. What about your core business?
All too frequently business owners focus all of their attention on the new aspect of their activities, to the detriment of their core business. Growth is a resource-intensive process, and it is one to which you will necessarily devote a lot of your time. But it is important that you do not lose sight of your existing activities. Make sure that you have sufficient resources to continue to provide a great service in the established areas of your business. Remember that this isn’t just about staff or funding – it is also about ensuring that you, as the business owner, manage your time or delegate in such a way as to enable you to retain oversight of all aspects of your business.
5. How will you manage the risk?
Finally, it is important to understand that expansion is a risky business. You need to develop strategies to help you manage that risk if you are to grow in a sustainable way.
Every business faces its own specific set of risks, and these will change over time. Make sure that you conduct an exhaustive risk assessment to help you identify the potential threats facing your business during its growth period. For example, will your supply chain become more vulnerable? If you are planning to import or export, are you at risk from currency fluctuations? Where possible, eliminate those risks. When elimination is not feasible, consider the ways in which you can mitigate them. Make sure that you revisit this assessment on a regular basis. This will help you to keep abreast of the challenges your business faces, and will ensure that you are well equipped to meet them.