Rome was not built in a day, but it was just about flattened in one.
Growing your business is a fine balancing act. Sure we all want to have exponential growth, but all too frequently, this growth curve is not sustainable and things tend to implode quickly.
The absolute classic business killer is cash flow. Lose control of your cash flow and you have lost your business. I know, I have been there.
All too frequently, success appears to be a measure of turnover, or profit, or the number of new contracts. There are thousands of metrics that observers use to define success, and they can be contextually justified.
You could, for example, plot the growth of ABC Learning Centres. Successful – yep sure was, that is until the cash flow demon destroyed everything. Was the founder’s mistake growing too quickly? Or was his mistake not selling early enough? Regardless, losing the lot does not rate too high on my list of successful businesses.
On the other hand look at Westfarmers. They have been around for a long time. They have expanded their business interests through growth, diversification, and acquisition. Growth rates have not been spectacularly fast but they have been consistent; now they are now a major force in different retail industries.
So where does one start when looking at business growth?
The Business Plan
Remember your business plan? This is the one that you started back before you started trading. Unfortunately, most business owners, with good intentions, start a business plan, and some actually finish one. But very few actually review their business plan once trading has started. A business plan is more than a pre-trading document. The business plan should be constantly reviewed. It needs to be updated with new information as it becomes available. It needs to consider changed product lines, business conditions, new opportunities, staffing, the premises. It needs to be a document that triggers the business review process and once updated, needs to be your guide book for the next xx months. I have purposely not defined the review period because it is different for all organisations. Additionally, your business plan needs to have a look forward section. Where do you expect to be in 2 years’ time? In 5 years’ time? What is your exit trigger? What is your succession plan?
Goals
You are in business to achieve some outcomes. It might be related to security and passive income, it might be ambitions of growth or turnover targets. Goals need to be set, but at the same time, they need to be realistic; the need to be achievable, they need to be measurable. It is fine to have high level goals and it is just as important to have smaller achievable goals. By setting something that is realistic and achievable, you will gain confidence to continue up your goal path. Goals need to be embedded into your business plan and as such, need to be reviewed and adjusted and reset after regular reviews.
Opportunities
Opportunities may present themselves from left field. They are probably not included in a business plan as they tend to be difficult to predict – if they were then it would be considered a goal rather than an opportunity. Your business operation needs to be flexible enough to allow resources to evaluate these opportunities. Your business planning cannot be set in concrete.
The Bank Manager
I hate banks. I don’t hide that fact. But rather than fight them learn to use them. They are just another resource that you should be able to use for your own benefit. Bank managers love plans so make sure that documentation that you present, such as your business plan or your financials are complete, considered, and appropriately analysed. Banks, for a long time, moved away from the personal service for which they were once known for. Fortunately, this appears to be changing and most of the banks now employ business managers. You need to establish close working relationships with these managers as you don’t necessarily want to re-pitch your business ideas every time you want to make a change to the services that you use. Banks are just another resource so use it to your advantage – after all they are the ones that usually carry the risk, especially if you can get to stage where your business growth is not tied to security. Oh, and on a personal note, you do not owe banks any loyalty – they will rarely show loyalty back, so if a better deal becomes available elsewhere do not hesitate to switch.
