5 Factors Keeping Your Business From Growth
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When you run a small business, you’re faced with a potentially decision. Do you keep your business small? Or do you lay down the infrastructure to scale up your enterprise and build for growth. If the answer is the former, that’s absolutely fine. Sometimes the difference between a successful startup and one that falters is simply knowing the scale at which you can do what you do to the best of your ability. Besides, there’s a strong argument for keeping your small business small. It allows you to offer your clients and customers a level of individual care or manufacture products on a bespoke level which would be nigh on impossible for a smaller enterprise. If, however, you decide to push for growth it’s not always easy to create the conditions which lead to long term and sustainable growth. A lot of new entrepreneurs assume that growth is simply something that comes organically; that it’s a natural and inevitable consequence of doing what you do really well. Granted, there is an element of this. Success in business comes from an increase in demand, and as you scale up your enterprise to keep up the supply to meet demand this is the purest form of growth in business.
However, there’s more to facilitating sustainable growth than staying on the right path. Unless you make strategic changes to your business, it’s inevitable that you’ll flounder as your existing infrastructure struggles to keep pace with the ever mounting influx of demand. Inevitably your standards will start to slip; mistakes will be made, your customers won’t get the same level of service they expect and your reputation will be compromised. And in a small business, nothing is more important than your reputation.
If you’re serious about growing your business, you need to carry out a thorough and complete audit of your enterprise and identify any areas which may be impeding your growth. This may mean cutting some unnecessary expenses and dead wood to keep your business agile or it may mean investing more heavily in the tools you need to do your job on a larger scale. Here we’ll look at some common factors that can keep a small enterprise like yours from growth…
External factors
There are some things that affect the growth of your business that have nothing to do with how well or how poorly you’re doing your job. There are myriad social, political and economic factors which influence consumer behavior and as hard as we try, it’s virtually impossible to come up with a business model that’s immune to these factors. No business brain, however astute can predict the next economic recession, nor how a change in political leadership will trickle down to influence consumer spending. But just because these are external factors by no means does this mean that you are powerless to do anything about them.
One of the worst things a nascent entrepreneur can do is operate with their blinkers on, steering the same course regardless of how the tide turns around them. While a recession, for example, might seem to inhibit consumer spending you can still attract them to your business by building value. Sure, this may mean throwing a sale and taking a hit on your margin, but even strategies like upselling or selling fiscally conservative extras like product insurance can be effective in economically uncertain times. Keep your nose to the ground, be prepared to rotate your stock in keeping with consumer trends and react to every news story with a “How does this affect my business?” and your business will have the agility to move with the times.
Under investment
When entrepreneurs are first starting out, they’re trained to reduce overheads wherever possible. Of course, a diligent entrepreneur must always be on the lookout for areas of wasteful and unnecessary spending, changing suppliers to get better deals and finding ways to increase and protect their profit margins without driving up prices. Nonetheless, under investment can seriously hobble a business with growth in mind. If an investment comes along that has the potential to drive up productivity, increase your sales volume or reduce your personnel costs it behoves you to take it. But if you don’t have the ready capital handy to make these investments, your competitors may capitalize on them at your business’ expense, which brings us to…
Poor cash flow
It takes money to make money, but the wise entrepreneur knows when and where and how much to spend in order to maintain sound liquidity. Liquidity is cash and cash is liquidity. It refers to the assets that you’re able to keep moving quickly around your business. Every time we buy a piece of equipment or a batch of stock, it solidifies our assets. Thus, even important capital investments can potentially compromise our liquidity, especially if they take a while to begin paying for themselves. As the leader of your business, it’s up to you to keep an eye on your cash flow and ensure that you have ready capital on hand for capital investments or unplanned expenses like repairs to your equipment or premises. If, for example, your money is all tied up in stock, it’s best to slash your prices to get the stock moving quickly than to leave it gathering dust on the shelf. Your margin may be important, but sometimes it must be sacrificed for the sake of your cash flow.
Your tech
An agile approach to technology may mean the difference between growth and stagnation. If you’re not technologically minded, it’s all too easy to be resistant to changing and re-evaluating your tech on a regular basis simply because you don’t relish the prospect of having to learn how to use the new stuff. Moreover, training your employees in its use can be a time consuming and disruptive process. However, adapting your software and hardware to something that better suits your needs is always a worthwhile investment. If you start out with “off the rack” software solutions, you may need to switch to something more bespoke in order to better meet the needs of your growing business. Rather than labor on with something that’s not right for you, reach out to a trusted custom software development company – Svitla Systems. A development company can design solution which are built around your needs and intuitive for your employees. This makes upgrading your software to a custom solution a great example of a capital investment which can facilitate growth.
Your people
Your employees are the ambassadors and stewards of your brand. Everything they do as they carry out their day to day duties should embody the ideals and standards upon which your business was built. When starting out in business, it’s not uncommon for our first impressions about a candidate at interview to be misguided. Often, employees turn out not to be the people we expected at the interview stage. While replacing them may cause disruption and a brief addition to the workload of your other, trusted employees it may be a call worth making if your employees toxify your brand by not putting in as much effort as their peers.
That said, even outstanding employees can’t be counted upon to be outstanding all the time unless properly motivated. It’s your responsibility to ensure that your employees receive ongoing training and professional development as well as a competitive salary and incentives structure that rewards their hard work in tangible ways.
When you have all of the above ducks in a row, your business is on the fast track to ongoing growth and success!
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