How To Grow Your Business Safely | Your Business Coaching Club

To succeed, you must find a way to grow your business and you shouldn’t shy away from growing just because there are challenges involved. Businesses don’t fail because they grow. They fail because they don’t manage their growth or grow their managers. Here are some ideas to grow your business safely.

As a business owner you are always looking for ways to grow your business, and as you begin to increase sales and develop new opportunities it is not unusual for your plans to turn to expansion. But unplanned growth can be as deadly to your business as no growth at all. Fast growth can destabilize a business giving its owners a false sense of security while the extra sales volumes can eat up more working capital than expected. If you are aiming for business expansion, keep these things in mind.

 

Watch Your Overheads

 

The biggest danger in implementing a business growth program is the loss of profit that comes from uncontrolled spending when you are just too busy to keep your head around what is happening. Overhead costs that were under control in the stable business situation can increase rapidly to cover the extra expenses associated with a larger scale of operations – transport, inventory, rental on more storage space, and all the rest will eat into your working capital levels if not closely watched.

 

Track Your Profit Margins

 

You would normally expect that you can increase sales levels and achieve the same profit margin, or even better because overheads will be spread across a larger amount of sales turnover and because the cost of goods will go down as you buy in larger quantities But this is not always the case. Greater sales often come with unanticipated costs and reduced efficiencies that can actually decrease your margins. You need to constantly track your profit margins to see if you are really growing or just running faster to stay in the same place.

 

Employ Strategically

 

As you grow your business it seems normal to hire more people but a sudden influx of new employees can bring problems ranging from changing the dynamics among the old team and creating morale issues to much higher insurance and employee benefits costs. Consider alternatives such as retraining some of the current staff to pick up new roles, taking on freelancers and temps or maybe even outsourcing some of the work. Balance your use of temps against the training investment they need and the skills you will really need to have on tap in the business because these people will take their knowledge and skills with them when they leave.

 

Don’t Underestimate Cash Flow Requirements

 

A growing business is hungry for cash to fund increasing debtor and stock levels as well as increased overheads and capital investments. Usually most business owners will source a business loan to expand operations. But the danger here is that if the growth doesn’t go according to plan then the business can very easily end up making a loss with a horrible credit record. Look for the cheapest and most flexible source of funds from reputable providers and have a detailed and realistic projection of income and outflows to fully understand your funding needs.

 

Keep Your Customers Loyal

 

Great customer service is what brings business success, but ironically it is also one of the first things that is forgotten when businesses go into expansion mode. Employees get caught up in the ramping-up activities and lose track of what is happening with customers. So the very customer service that helped you grow your business in the first place becomes difficult to sustain and you lose customers. Winning new business through the growth phase can also be hard to factor in to activities. The key to retaining customers is to maintain adequate staffing levels that ensure existing customers continue to receive the attention and service that has made you their supplier of choice.

 

Forecast Cash Flow

 

Sudden business growth can involve a significant investment to handle the production of new orders that won’t translate into cash in the bank for some time. In the meantime the business still has to pay its suppliers. Poorly managed or insufficient cash flow is a major cause of expansion failure. Having a good understanding of your cash flow needs when going into a rapid growth phase will make the process much less dangerous to the business’ survival.

 

Try To Avoid Arguments Among Owners

 

Multi-ownership can pose its own threats to the success of your business expansion drive. Ownership arrangements that have functioned effectively prior to expansion activity can become increasingly problematic. As business issues become more complicated the views of different owners on such things as how to run the business and their vision of where it should be going may diverge and introduce a conflict to the ownership group.

 

Particularly hard to deal with is the situation that arises when the growth takes the management of operations beyond the abilities of one of the owners so that they are no longer making an effective contribution. When this occurs the departure of one or more of the owners may be necessary to establish a common vision for the growing business.

 

To succeed, you must find a way to grow your business and you shouldn’t shy away from expanding just because there are challenges involved. Businesses don’t fail because they grow. They fail because they don’t manage their growth or grow their managers. There’s no substitute for growing safely by following a sound business plan.

 

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