Over the course of my career, I’ve been privileged to serve as a sounding board for many such companies. While there is no one clear formula for growing a business, those that succeed tend to go through common stages and face similar challenges as they add staff, develop systems and manage cash flow, among other things. If you are thinking about shifting your business into a higher gear, you might follow their lead and…
Set clear strategic priorities
Growth is a great objective—as long as an owner has a clear idea of where the business is headed.
That’s why it’s important to set clear strategic priorities before you start making changes to your business. Your investments can then align with your priorities. A company that wishes to expand its online presence, for example, should probably think twice about investing in a new delivery van. Likewise, a company that calculates each department’s annual budget as “last year’s, plus two percent” is probably not putting its money where its priorities are. For example, a company that wants to add a new product or service should reflect that fact in its budget and reduce spending, if necessary, on more mature products.
Reorganize for growth
A company’s organizational structure may function perfectly well—for now. But, today’s structure could put you at a disadvantage if you steer your company in a different direction.
Consider that most small businesses start with a simple organization. The owner performs all the important jobs, supplies direction and funding, and personally manages any employees. In many ways, the owner IS the business. Systems and plans, if they exist at all, are minimal. As a company grows, all that will have to change.
If you are accustomed to approving all financial decisions, for example, you may need to delegate some authority to those on the front lines. Accounting software programs like Quicken and QuickBooks, offer reporting mechanisms that keep owners abreast of how money is flowing in and out of a company. Likewise, you can discuss with your bankers a full range of small business banking services, fraud-protection tools and other “checks and balances” to add security as you relinquish control to new managers in a reorganization.
The work environment also grows more complex as the owner and the business begin to separate. Any original systems may become redundant—or strained. For example, a company with two locations and duplicate services in each may find it gains efficiencies by consolidating them in a central location as it expands. In other cases, a company may find it more efficient to decentralize its back-office operations. The key is to organize your business in a way that enables you to execute your priorities and achieve the goals you set.
Reshape your culture
It’s not just how your org chart is designed that matters to your future growth. It’s also about the names that fill the blanks on the org chart and the common values they share.
If growth is on your horizon, it’s important to take a fresh look at both, making sure you have the talent and corporate culture you need to succeed. Your corporate values—the principles that guide employee conduct as they go about their work each day—are key. They provide a framework for solving problems, making decisions and more. A company that places high value on customer service, as just one example, may evaluate an opportunity to expand store locations differently than one whose business is built on innovation.
Look for opportunities to diversify
Speaking of employees… now is also a good time to analyze your workforce, looking for opportunities to diversify in ways that provide a distinct competitive advantage. Are there holes or weaknesses in your current management that might be addressed with new talent? You’d hate to have an expansion hampered by underinvestment in a trained sales force.
Diversification can also apply to your products and services. If you operate a fitness business, perhaps you should consider adding nutrition consulting or personal training services. Or, diversification might mean entering new geographic markets or appealing to new demographics within existing ones. Engage your staff in exploring new segments you might enter and other opportunities for creating new business.
Plan for future leaders
You may think you are years—maybe decades—from turning over the reins of your business to new leadership. But that does not excuse you from the need to start thinking about your company’s future without you.
If your company grows as you intend, you will need more leaders, regardless of your own personal plans. So start putting together a process now for training them and positioning them to grow with your company.
Can a company grow without taking these steps? Maybe. But undertaking an expansion is a journey. Upfront planning can help make the ride a little smoother. So can seeking counsel with other business professionals, including your banker. We’re pulling for you to succeed. iBi
Brent Eichelberger is Illinois market president for Commerce Bank.