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How to plan Business Growth - Top Tips

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This month, Helen Cracknell, from Business Link, the government’s network providing guidance for small and medium-sized enterprises, looks at the first steps to take when planning growth.

Whether you are running at a loss, breaking even, or returning a healthy profit, there is always an opportunity to grow your business. But expanding can be challenging and risky. To give your business stability and direction through growth, adopting the right strategy is essential. Timing is also critical and you must make sure that you have the capacity and resources to cope with the expansion whilst still fulfilling current customers’ requirements.

Business Link recommends the following steps when planning growth for your business.

Assess your business

Before doing anything else, take a health check of what shape your business is in now. This will help you ensure that it is properly structured and resourced to make the growth strategy you choose viable. A burst of activity that has not been properly planned could seriously damage your business.

At the same time, ensure you look after your existing customer base – it’s their business that will help provide you with the vital cashflow to support growth.

Financing your growth strategy

Any kind of growth will require investment, from new stock and recruiting people to investing in marketing activity or even opening a new store. To establish your capital requirements, think about some of the following areas:

• The amount of investment required to fund the venture
• When it will be needed and availability
• The return on the investment

Remember to ensure that enough money is in the pot to keep the core business running. It is also a good idea to build in surplus too, as projects can often take longer to bear fruit than originally predicted.

Finding opportunities

One of the keys to business growth is identifying new opportunities.

Research will enable you to identify potential prospects. Basic market research is one option, and will help you understand what your customers need and look at any necessary changes to build a more flexible and responsive business.

Local demographic information can also help inform your strategy. For example, if you are located in an area with a lot of young families, you could think about this as a new target area for your business. On the other hand, if the town or area your business is situated in has an ageing population, then perhaps this might influence the focus of your business.

Achieving business growth

Growing your business organically is usually done in one of two ways – by either increasing market share, or by diversifying into new markets. Both of these approaches present different challenges and benefits, and the one you adapt should depend primarily on your business, its resources, the local market and opportunities you may have identified when planning and researching your options.

Increasing market share

Increasing your market share involves attracting new customers and sometimes tapping into a competitor’s customer base. To achieve this you must have a thorough understanding of both your customer base and of rival businesses.

Some of the factors you might want to consider when planning a drive to increase your market share include:

• Existing customers and beyond: Think about who your core customers are and other potential customer groups that you have not yet targeted
• Competitor audit: Look at what your customers do and how well they do it. Think about whether you should be introducing any of the products or services that they have
• Unique selling point: Does your business have a point of difference or anything which makes it unique? If it doesn’t, then can you introduce something that will attract new customers and make existing ones more loyal?
• Losing customers? Think about whether you have seen changes in your customer profile. Did your business previously attract different types of customers and if so, what stopped them from going to you?
• Commuincate: Consider investing in marketing – local advertising or even public relations will help you raise awareness and get people to use your business

Diversification

Diversification can take several forms, including:

• New or related products and services to existing customers
• New markets for existing products
• New products for new markets

Because of limited resources, this approach can be more risky for small businesses. As you are doing something new in a less familiar market, there is an element of uncertainty as to how successful the diversification activity will be.

Diversification requires more time, expertise and investment than simply increasing your market share, so think through some of the following areas:

• Market research: Look into whether there is an appetite for what you are thinking about introducing
• Development: Map out the process to determine how you will introduce the new service or product to your business – this could be in the form of a prototype or a test run
• Money: How much will diversification cost you, and how much can you expect back from it?
• Sales and marketing: Does your business have the capacity to promote and deliver the new product or service?

Generally speaking, diversifying with similar products or services and selling them to a familiar customer base is less risky than creating a product for a completely new market.

And finally

The areas above are just some of the first steps that you may think about before growing your business. Depending on the size of your business and the scale of your expansion, other areas such as staffing, training, premises and technology may become relevant.

When it comes to rolling out your expansion, use a timeline and targets to keep track of the short-term objectives of the phase and achieve the long-term goals. Remember, it’s important to grow at a pace that your business can cope with, both internally and for your customers.

 

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