The process of growth is continuous and is an essential component of a business. Growth plays a significant role in the survival of a company from a long-term perspective. As a small business owner, you must invest time and energy to work out some strategies to grow your business.
Sometimes companies see a sudden spurt in demand for their products due to certain factors in the market, but the advantage may be short-lived unless you are prepared. How does a company gain by growing?
The Benefits of growth
- New opportunities
- Increase in market share and dominance
- Bigger customer base
- Better risk mitigation
- Generation of higher revenue and profit
But initiating growth is not easy –it involves plenty of analysis and strategic planning. It also requires an understanding of local business laws and regulations since an expanded operation might require additional compliances.
But then, how to expand a small business? Here are some business growth tips.
While specifics may vary with the type, scale and stage of the business, the following factors can be helpful in general for working out a growth plan of a small business.
The 10-step planning
1. Analysis and status review
It is essential to start with a self-analysis. You must know the strengths and weaknesses of your business besides the prospect of your product/service.
Where does your company stand, internally and in the market?
Can the products satisfy the customers from their point of expectation? What are the problems faced by the company- technical issues, sales and marketing related, or finance-related?
Answers to these will give you an updated status of your business. The review will also identify the capabilities of your equipment and machinery, employees and finance.
2. Market research
Demand and competitor analysis are two critical inputs to your planning -
A small business usually operates locally. This indicates how vital it is to find out the prospects of the market.
Know your competitors; revise your credentials based on their pricing, packaging, and promotion. Is there a new product in the market?
More importantly, will your existing market consume the additional quantities you are planning, or, you have to target a different market?
The role of marketing is crucial for a small business (or any business for that matter). Understanding the dynamics of customer behaviour is an essential task of research and can give you ideas to grow your small business.
3. Planning for funds
The review of your company gives you a positive signal for expansion. But, the important question is, where to start?
The first agenda is organising funds. You have to look for funding for your estimated expansion. Get in touch with banks, financial institutions, NBFCs with your proposal.
Remember that any financier would need your past data in a structured manner along with your operational strategy for the additional capacity.
Terms and conditions like the type of loan, interest, repayment, and security to be provided have to be finalised based on your company’s suitability.
4. Keep track of cash flows.
The regular working capital of your company should not get disturbed due to additional borrowing or expenses on account of the expansion.
One must realise how critical is cash flow for a small business. Maintaining a continuous positive cash flow should always be the objective.
5. Is an expansion worth the effort?
Finance is the most critical resource for an enterprise. Your planning is not complete unless you know the probable ROI (Return on Investment). There is no point in expanding if the projected ROI is negative beyond the short term.
A serious approach to working out the ROI is required. Remember, banks will give you funds based on their assessment of your creditworthiness. But, as an individual owner or part of the ownership, you will be taking the risk of borrowing money and will continue to be liable until all the instalments are paid off.
6. Finalise product strategy
Analysis, surveys, financial reviews have given you clarity on how to expand the business. Depending on market research findings, the product strategy of your company has to be finalised.
Whether it is a new item or the expanded capacity of your existing line, you have to decide the right strategy to implement.
7. Creating the necessary Infrastructure
Among the several answers to how to grow a business, your strategic reviews have indicated an infrastructure upgrade. To manage higher turnover, increased activities and more customers, it is essential to take the help of technology.
Business Improvement Software: To handle your accounts, production process, staff attendance and several other activities that require daily monitoring;
CRM (customer relationship management) applications for customer-related activities;
Team performance: Growth will result in a higher volume of work. So, you must have the right person at every slot. If required, the staff must go through communication, teamwork and other skill improvement training.
Outsourcing options: Outsourcing is a regular business option for managing growth and reducing the cost of operations. You may use this resource if it suits your business.
8. Reworking your marketing plan:
Now, you have to enhance your marketing performance- finding new segments, more customers, and improving the brand value of your product and company.
Use all channels to reach your target audience online via social media sites and offline via community events. Content must be in sync with your product strategy and the company's declared mission.
Use digital tools to measure the effectiveness of your campaign and modify suitably according to the need. For primarily online businesses, the right SEO strategies can bring quick results.
9. Understanding your customers better
Customers hold the key to success in any business. Suggestions and guidelines on how to grow small business indicate continuous engagement with customers. Regular feedback and opinions can give insights into their needs and expectations besides the level of satisfaction with your product/company.
Beyond the usual promotion, you may plan loyalty and reward programmes for customers. Keep in mind the additional quantity your company has to sell.
A favourable brand opinion is necessary as word of mouth plays a significant role in developing a brand image for a small company.
10. Taking the plunge:
You have done everything needed for business expansion, from internal reviews to market surveys, working out finance deals, ramping up your operations and planning strategies. Now, it is time to take the challenge and grab the opportunities. Even if you fail initially, it will teach you to innovate and come up with newer solutions.
It is said that an optimistic risk-taker considers failure as experimentation with ideas.
At some stage in their career, most entrepreneurs ask the question, how to grow my business? Unfortunately, there are no instant success formulas and neither can the company grow on its own.
The business owner has to define the metrics of growth and implement systems to drive growth. No doubt the number of risks will increase, but risk-taking always gives you a competitive advantage.
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Q. Will adding a new line of business help in the fast growth of my company?
Ans. The vital point is the objective; it is not a fast growth but a sustained overall business growth.
If the new line is not cost-effective and draws on the existing resources, the company may face turbulence. The aim of every company should be continuous growth along with profit.
Q. System up-gradation will need a lot of funds. Is it beneficial for a small company?
Ans. Technology pays for itself- you will get ready figures related to production, sales, debtors, creditors and more. This will ease your decision-making process.
The staff cost, better monitoring and faster decision-making will justify the investment. Moreover, the price of such software is not high –you can get in touch with OK credit for sales accounting and HR- related packages. OK credit is a reliable company with a long list of satisfied customers.
Q. What happens if a company does not grow?
Ans. Growth is a natural process in business. If a company does not grow, its market share will fall over time, costs will go up, and one fine morning it will face cash scarcity.
These are signals of an approaching disaster.