What to consider when growing your business
Growing your business is an exciting, exhilarating and challenging time. There are a lot of factors to consider in understanding if it’s a good time for your business to grow. Whether you’re anticipating expanding your location, team, or product or service line, there are several key decisions to make when taking your business to the next level.
This article will dive into the key opportunities to consider when you’re ready to take the next steps in your growing business.
The need to grow a business can come from a variety of factors. Some indicators that you may want to consider growing your business are:
- Your business is growing organically and you want to be more strategic about how to expand
- Your customers want products or services that you don’t offer
- You have identified a new target customer for your current products or services
- A new market for your current products or services has emerged
- Your products or processes can be innovated or improved
- Competitors have left or entered the market and changed the landscape
Growth makes sense when it’s needed to meet customer demand and/or to remain competitive, but it’s important to understand the financial and organizational impacts to your business.
When looking at the financial aspects of growing your business, consider where you might get access to funding:
- Do you have extra cash in the business?
- Do you have additional inventory that you can sell?
- Do you have outstanding accounts receivable that you can collect?
- Do you have access to new investors, loans, or grants that could fund the growth?
When growing a business, sales are always considered, but it’s also important to estimate how much the cost of goods/services sold and operating expenses will increase alongside an increase in sales. With these numbers calculated, if there is an increase in all or most of these numbers, this is a sign that growth could make sense:
- Net profit
- Gross margin = gross profit/revenue
- Operating margin = operating profit/revenue
- Net profit margin = net profit/revenue
Ensuring that your business is financially ready is key to success, however you should make preparations beyond your finances to map out successful growth.
Operationally, consider the requirements needed to grow:
- Do you and your staff have the expertise and time to implement growth strategies? Will you need to hire additional team members or experts to support your business growth?
- Does your business have the operational and systems capacity to sustain growth? Consider your manufacturing, equipment, website, CRM, and other tools you need to grow your business. If not, can you use the financial resources available to you to put those requirements into place?
- Would any amendments to your products be needed to accommodate intellectual property or safety rules in another country?
Lastly, growing a business can be taxing, not only on a business owner but on the employees of your organization as well. Taking care of your people, your processes and yourself is key in expanding your business. Consider how you might update, adapt and communicate the culture of your organization to prepare your team (and yourself) for the road ahead:
- As a leader, consider how you might take time to prepare, coach and upskill yourself and your team
- As your company expands, what is your plan to provide additional support to your team through organizational growing pains?
- How will you recognize and retain the people you need to help your business expand?
- How and when will you ask your team for input on the growth strategy?
Growing your business is challenging, however consistently asking yourself these questions and creating (and consistently revisiting) a plan will help you as your business grows. For more information and advice on how to review your business’ finances, operations, and readiness and to assess if you’re ready for growth, you can meet with an ATB Entrepreneur Strategist.