1. How would a business owner assess if their business is ready for growth?
The reality of an entrepreneur is that the person starts on his or her own, or with a partner and perhaps an assistant or two.
When I coach start-ups I help the entrepreneur to set growth criteria in the business plan. These criteria would be related to consistent increased turnover for a specific timeframe. My recommendation to business owners is at least six months consistent improved performance at a significantly higher level, 15% or more. If this level of performance can be maintained the business owner would have the funds to invest in more people and improved processes and systems. It is imperative that the business owner sits with the business coach and does a careful analysis of the growth process – should more people be appointed or should the growth programme rather focus on improved technology or processes. The end result should be improved profit!
However, I have also seen businesses that “explode” overnight because of a tender that was awarded to them or a client they obtained. The symptom of this growth need would be more work that could possibly be done by the current employee corps, the available equipment and the processes and procedures. Another excellent way to grow a business is to form a relationship with businesses that will enable you to meet your targets and you do not have the additional cost to company. If a client of mine wants to do this, I would advise them to develop a service level agreement that will indicate performance levels, quality standards and contract fee. Do not enter into a “Gentleman’s Agreement.” It does not exist and will cost you dearly.
My advice to my clients is simple – appointing more people is your last resort. The first action should always be to analyse work processes and to ensure there are no bottle-necks or other inefficiencies in the processes and symptoms.
- Set your business up for growth
- Identify growth thresholds
- Celebrate when you achieve these thresholds
- Do not just appoint more people
2. Finding the right way to grow a business is critical. What are some of the strategies small business owners could consider?
There is only one tactic that should be used to grow a business and that is “Find more clients to do more business with.” There is a lot to say for online marketing but for most small businesses relationship marketing is their life-blood. Remember your network will determine your networth! Surround yourself with successful people and determine how you can help their organisations to perform better or how you can co-ordinate forces and win big.
Another requirement for business growth is branding and marketing. You cannot grow if you do not market and marketing can only be effective if you have a strong brand – a brand that reflects reliability, quality and success. I tell my people – if you want to grow and be successful, look and behave like a successful person. Nobody wants to do business with a person that looks like a failure with an unprofessional business card and untidy appearance.
3. Is a formal expansion plan necessary? What would go into this?
A formal expansion plan is the ideal. Write it into your business plan when you create your business and review your business plan and your growth plan every six months. The elements that ought to be considered regarding growth would be specific targets that must be achieved and maintained for a period of time. I also advise my coaches to indicate the expansion processes they would consider at what point. Expansion processes would include setting up a service level agreement with another entrepreneurial business, franchising, getting more partners, acquiring new businesses in the same industry to enlarge your footprint or to appoint more people and get better and more equipment, processes and procedures. Whatever an entrepreneur decides to do, my advice will always be check your plan with your business coach and make sure it is financially viable.
4. What are some of the things to consider when looking to grow a business by bringing a partner on board to provide an injection of cash and expertise?
My first business coach said to me “Remember getting a business partner is like getting married. The only difference is that it is more difficult to get out of a failed business partnership than to get out of a failed marriage.” The person might bring cash into the business that can save it, but the relationship can eventually kill the business. Compatibility regarding finances, people management, quality and growth are imperative. I would always advise potential business partners to have their personality profiles tested and discuss the outcomes with each other, preferably in the presence of a business coach. Work together on smaller projects and experience the relationship before you sign on the dotted line. Do not be fooled by the other person being “a silent partner.” If the person put money in your business – he or she will not be silent if he or she does not agree with the way the business is managed. A partner is a partner – be careful.
Anything else you would like to add?
It is often said that 80% of all entrepreneurial businesses fail within the first five years. This statistic should not be tolerated. 100% of all entrepreneurial businesses must succeed. It is possible to achieve this, if every entrepreneur has a coach, like a sports coach, to guide them, stretch them and help them to achieve their full potential.
And a parting thought – if your business is not fun, it will not be success, but that is a story for another day!