National Funding recently conducted a survey of small business owners to understand how they feel about the present and future economic outlook. By all indications, the outlook is bright. Of the 133 respondents, 60% reported feeling “very confident” about the sustainability of their business. Over 50% expect their business to grow significantly over the next five years, and 85% are forecasting profitability over the short term. Even in a strong economy, however, sustaining a small business isn’t easy. When asked what financial challenges are the biggest concern, the top answers included finding funding for business growth and covering temporary cash flow problems. These responses are telling because they indicate that many small businesses are eager to grow, they’re just unsure how.
As with most things, it helps to have a plan. Growth doesn’t happen accidentally or overnight – it’s the product of a systematic and sustained effort. Simply stated, if you want your business to grow, you need to engineer it yourself. Follow these tips as you plan out your efforts:
Select a Growth Strategy
Before making any other moves, your business needs a growth strategy. This means determining how you will grow your business – and there are multiple ways. The most common is to expand further into current markets by selling more of your existing products to your existing customers. Another option is to develop adjacent markets where you sell your existing products to new customers – opening a second location in a new city, for example. You could also pursue alternate sales channels (like selling online), begin developing new products or start selling to different customers. Not all of these options are necessarily viable for every business, but they all deserve consideration. Once you decide which strategy is most realistic based on your goals and resources, all your efforts to engineer growth will be focused on the same purpose and you can move forward powerfully.
Consider Staffing Requirements
As you grow you will likely need to hire additional staff to compensate for your additional customers or the extra back-end workload. Don’t let recruiting be an afterthought in your business growth planning: with low unemployment rates currently, talent is in short supply in all industries at every level. Finding the right employees is key to ensuring your business’ growth and sustaining those gains. In order to avoid talent gaps and staff shortages, you need to plan out your staffing requirements in as much detail as possible. When you anticipate your needs early, you can begin recruiting before you need to make a hire instead of after it’s absolutely necessary.
Secure Funding Sources
Growth is expensive. It takes a significant amount of investment to develop new products, open additional locations, launch major marketing campaigns or purchase improved equipment. In most cases, paying for these things out of savings is unrealistic, which is why many business owners turn to lenders. Small business loans are specifically designed to give growing enterprises a quick infusion of capital without creating an economic burden in the process. Equipment financing is another option to consider because it makes it relatively easy to purchase equipment that would be too expensive otherwise. Taking on debt is never an easy decision, but if the debt finances growth that ultimately produces more revenue, it’s still a responsible decision.
Outline Resource Requirements
When small businesses grow they don’t just get bigger – they fundamentally transform. In addition to needing more space, staff and inventory they might also need new technology, new business partners or new policies. If any of these components are necessary for further growth, they should be put in place to allow your business to fulfill its full potential. Make it an early and ongoing priority to forecast what resources you’ll need. Think about what is required to meet both your short and long-term goals. The sooner you identify these needs the sooner you can begin planning and preparing for them.
Expect the Unexpected
Even with careful planning, growth strategies can be disrupted by factors you never even considered. Imagine, for instance, that a natural disaster destroyed an important piece of equipment or a major supplier unexpectedly went bankrupt. Suddenly, you have to switch from growing your business to trying to keep it alive – which can put both efforts at risk. It’s impossible to avoid all disruptions, but businesses can become more resilient by preparing data backups, emergency financing and disaster planning, among others. With enough preparation, every setback is a minor one.
All businesses define growth differently. Your plan for the next five years could be to modestly increase sales, or it could be to open a dozen new locations. Either way, you need to explicitly define your goals and start mapping out how you will achieve them. Every business decision you make from here forward will either positively or negatively affect your growth strategy. When you have the right plan in place, more of those decisions work in your favor.
See our handy infographic below to learn more about planning for the next five years of business growth: