Is Your Small Business Positioned for Growth?
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Is Your Small Business Positioned for Growth?

Is Your Small Business Positioned for Growth?

Growing a successful business requires more than just being organized and keeping detailed records. It is essential to review and refine your processes and systems on a regular basis.  Evaluating risk, identifying opportunities, and implementation of new strategies tend to get overlooked when business owners are involved in the day-to-day operations of running their business.  

I have been working with one of my clients who has experienced tremendous growth and change the last few years — our meetings have been focused on next steps, strategy and the development of a 1-page governing document that establishes conditions of success that help to manage the growth and everyday work of the company.  

Conditions of success can be different for each business. In this case, we focused on profitability, people, operational excellence, continuity and market dominance. Expert consultants in leadership and human resources were hired to work on this project.  

I mention this because although small businesses can vary in size, they often share common problems. Categorizing these problems and understanding growth patterns in a useful way can leave an entrepreneur feeling hopeless and overwhelmed. According to an article that I read on the Harvard Business Review website, there are five stages to business: 

  1. Existence
  2. Survival
  3. Success
  4. Take-Off
  5. Resource maturity  

I want to discuss the success and take-off phases as that is where most entrepreneurs get stuck. Business owners in the success phase must decide if they want to expand or stay stable and profitable. If they choose to expand, this involves a financial investment and potential risk. 

In the take-off phase, we look at rapid growth and how to finance and manage that growth. Here we discuss delegation and financial risk. The owner can no longer run solo and needs to be able to accept a high debt-equity ratio. This is a complex business environment where key talent and delegation is required.  

Before taking the plunge, here are a few questions to ask yourself. 

  • Is this worth doing? 
  • Do I need strategic partnerships, and if yes with whom?
  • What processes and systems need to be updated or modified to support the growth? 
  • Do I have the key talent in place to support the growth?
  • Am I currently maximizing my revenue?
  • Are there new revenue streams to develop?
  • How will I obtain new customers?
  • Should I upgrade software or technology?
  • What are the strengths, weaknesses, opportunities, and threats to this expansion?
  • How loyal are our customers and team members?  

It's important to be unique by design. One must think ahead and plan, doing so does not eliminate risk but it can certainly reduce the risk. Do your research, know your competition.  Be different, be creative, be adaptable, and focus on nurturing your people, customers, strategic partners, and brand advocates. 

Growing a successful business doesn’t happen overnight. It takes time, money, patience, people and an unstoppable attitude.  

SEPARATE BOX/SIDEBAR

The 5 Stages of Business

Stage 1: Existence

The main problem business owners face is obtaining customers and fulfilling on the products and services purchased. The owner does everything and is the main supplier of energy and financial resources. Systems and planning are minimal or created as you go. The strategy is to stay in business.

Stage 2: Survival 

The business owner has proven that the business concept is workable, and they have enough satisfied customers to keep things running. The main shift here is going from existence to balancing revenues and expenses. There is enough cash flow to stay in business. The organization is still simple. There is still limited human capital, and no one makes decisions independently.

Stage 3: Success 

The focus at this stage is whether to exploit the company’s accomplishments and expand or keep the company stable and profitable. Do you use the company resources for growth or to support the owners? Key professionals are onboarded at this phase and responsibilities delegated. As the business grows, it and the owner move apart.  

Stage 4: Take-off 

The key challenge is how to grow quickly and how to finance that growth. Key people must be very competent and prepared to handle growth. The systems that are strained by growth are refined and become more extensive. Often entrepreneurs who bring their company to this stage fail because they grow too fast, or they run out of cash, or they are unable to delegate effectively and efficiently.  

Stage 5: Resources Maturity

The biggest concern for companies entering this stage is to consolidate and control their financial gains brought on by the growth. It becomes more of a challenge to retain the advantages of a small-size business — flexibility of response and the entrepreneurial spirit.  

— Harvard Business Review 

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