The vast majority of businesses in the UK are operated by small business owners – often just employing one or two people. According to a recent House of Commons briefing paper, of the 5.7 million SMEs in 2018, 5.4 million of them are classed as micro-businesses that have fewer than 9 employees but together account for a staggering 96 per cent of the country’s business.
There are plenty of reasons why small businesses fail but one of the primary factors is lack of growth. If you run your own business, it can feel risky to push for growth, especially if you’re enjoying a comfortable level of success and would rather not rock the boat. But inaction can cause a business to stagnate, which can kill its momentum and cause custom to dip.
Obviously, it pays to take a cautious approach to expansion as it’s easy to shoulder too much debt or to over-estimate your business’s capacity for growth. So how do you know when it’s time to take the plunge?
- You’re at full capacity
- You have access to finance
- You’re heading up a great team
- You’re looking for new business goals
One of the best signifiers of projected growth is customer demand. If you’ve built a solid customer base with regular repeat business rolling in week after week, you’ll have a sound platform for growth. Even more so if you find yourself having to turn business away because you don’t have the resources to handle it. It is worth taking stock, though before you rush through any changes. If your company is only busy at certain times of the year, for instance, or is linked to a product or service with only short-term potential, you may be able to handle occasional peaks by taking on seasonal staff.
But if you’re disappointing potential customers due to overwhelm or have had to rein in advertising and marketing campaigns because you’re struggling to meet demand, now could be a good time to consider expanding.
Naturally, business growth requires capital. If you’re operating a logistics company, for example, any expansion would likely require the acquisition of additional vehicles or warehouse space. It doesn’t mean you need to have a chunk of cash sitting in your deposit account ready to be deployed but it does mean you should have a firm grasp on your company finances, cash flow and funding options.
Most people consider a bank loan to be their first port of call, although it may be easier and more flexible to establish a line of credit for access to expansion capital. This might take the form of a vehicle or equipment loan so you can quickly service new business. You need to revisit your business plan and re-calculate your forecasts based on your new projections so you can be sure your plans make sound business sense. Any lender will want to see a good business case, so it’s always a worthwhile exercise.
Growing your business will mean relying more on your key team members. If you have the right team in place, you’ll feel more confident about delegating responsibility and leaning on them for greater input. This strategy also involves investing in individuals so they can grow and contribute to the business, as well as plotting their own career trajectory. Nothing is more disheartening for loyal employees than to feel as if they’re being taken for granted or left behind as new recruits gallop by.
So pick your team carefully, reward and support them and give them the responsibility they crave. In return, you’ll have a team you can trust to help you move your business to the next level.
The goals you have when you’re first starting out are very different from those that will help propel your business further up the ladder. When your startup not only survives the first few years but quickly begins to thrive, you’ll soon find your early targets – growing your customer base by 20 per cent a year, for instance – will seem inadequate. All of a sudden, your fledgeling company has become an established brand and you’re ready for the next challenge. For some, this will mean selling up and moving on, but it can mean it’s the right time to expand and set fresh targets.
Take a pause to review your goals and modify them to meet your growth projections for the next 12-24 months. Redefining your business goals will force you to develop a new business plan and adopt the business strategies you need to meet them. Re-setting your trajectory this way will ensure you have everything in place before you act.
Growth is essential to the success of any business but expanding before you’re ready can result in failure. By taking time to consider where your business is now and where you want to go, you can determine if the time is right to take the next step on your journey.