During this series I am looking at a number of issues relevant to all Small and Medium Sized Enterprises (SMEs) and identify both the opportunities and challenges associated with each issue.
Last week I looked at accessing and using grants and loans. A big thank you to those who gave me feedback on their experiences.
Today my focus is on expansion and growth.
Knowing when to grow your businesses is a major challenge for all small business owners. Most of you want to grow so you can increase your profits, employ more people, sell more product and gain more customers. The challenge you face is to plan your growth and expansion well and make the right non-emotional choices at the right time.
If you use planning as a good business development tool, then planning the right steps to expand will not be difficult – they will follow on quite naturally. Expansion and growth must be driven by the business need – is there a good business case to get bigger? Will growth make more money or just cost you more? You need to have a clear reason for growing. Sometimes you can increase profits by just becoming smarter in the way you run what you already have. You need to be clear what is driving your desire to grow.
If you are considering growth or expansion, follow these steps before making a final decision:
Re-do your SWOT – Strengths, Weaknesses, Opportunities, Threats – and use that to help analyse your readiness to grow. What strengths can you build on and what weaknesses are likely to have a negative impact on your growth? Do an honest assessment of the opportunities available to you and if necessary, get someone to help you. Finally what are the risks in growing now?
Think about what is going on around you – what is happening in your local business or political environment that could help or hinder growth? Are there any lasting impacts of covid? If you rely on selling to visitors to the country, then what is the state of the transport infrastructure?
What do you enjoy most about your business at the moment – how will growth affect that?
What do you find most challenging and how will growth impact on that?
Revisit your goals for the next five years – how is growth and expansion going to help you achieve them?
What will growth mean practically in terms of buildings, equipment, staff, products and services, technology, skills and experiences?
Review your financials – talk with your accountant if you have one or a coach. Talk to your bank manager – it is not in their interest to encourage you into debt if they know you are unlikely to be able to repay.
Seek feedback from staff, customers and others like suppliers.
Make sure you take a thorough look at your competition and satisfy yourself that growth will help you stay ahead. Maybe you just need a few improvements to what you do already.
Can you afford it or will you need to borrow? If you do, can you afford to be in debt?
Consider all these questions, share your responses with a mentor or someone you trust, and then ask yourself if now is the right time to grow. Do you have clear evidence for growth or just some ill-conceived whim?
It is very easy to overextend yourselves, to take on too big a building or too much debt or too many staff. Sometimes growth is best in small steps – one step at a time so you have less to lose if things do not work out.
I am not anti-growth, but I am anti unplanned growth – I have seen too many really good small businesses become mediocre larger businesses. Owners who have lost their passion and spark. Family businesses that have lost that family support and closeness. Owners who have to work longer hours just to keep paying the ever-increasing bills.
The key to running a good business is to enjoy what you are doing – grow and continue to have fun is likely to be a great recipe for success. If growth becomes a burden, then that is likely to be a recipe for failure.
If you need help with your own growth and expansion plans or you want some feedback on your own practices, then please get in touch.
I am coming near the end of this series and next week my focus will be on technology. I will also cover exporting, resilience and more on working with friends and families before I close.
I hope you are enjoying this series and please give me feedback.
Breadfruit Consulting (www.breadfruitconsulting.com) is a Vanuatu-based business providing advice, training, coaching, and mentoring to businesses throughout the Pacific islands. Breadfruit specialises in a range of business development activities including ‘business continuity planning and action’, helping businesses to survive in a crisis, designing and starting new, sustainable businesses. Contact email@example.com or firstname.lastname@example.org
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