7 tips to successfully grow your business
You worked hard to get your company to where it is today. As an entrepreneur, you see the opportunity to grow your business further. But moving an entrepreneurial business to a larger entity can be extremely demanding.
With the decision to expand significantly, a company enters a new phase that is no longer business as usual. Strategies used when initially starting a business won’t work the same in this new environment. Entrepreneurs who recognize the operational, managerial, and leadership challenges encountered during growth have a better chance of success.
Here are some tips successful entrepreneurs have used to help transform their small businesses into flourishing enterprises.
Manage the risk. Risk generally falls into three categories: personal, business, and competitive. With growth comes risk, so you need to be sure that you weigh the risks against the rewards before proceeding. The more you anticipate risks, the better able you will be to manage them.
Grow with your company. If you are going to manage your company effectively in a wider environment, it is important to cultivate new leadership skills. Direct control of day-to-day activities may no longer be possible. That means having to give up certain tasks and learning how to delegate so that you can influence and motivate your team to make full use of their ideas and capabilities.
Plan for growth. A sound business plan can prevent a company from outgrowing itself before the resources are in place for expansion.
To avoid this from happening, determine your company’s “SWOT” — strengths, weaknesses, opportunities, and threats. A wise manager always does a SWOT analysis of the company, the competition, and current economic conditions when developing a plan.
Financing growth — don’t come up short. Quite often a gap exists between initial spending to fuel growth and the revenue generated from that growth. It is important to fill in the gap between these two phases by ensuring your company has adequate cash flow. This way you will be in a much better position to approach lenders if unforeseen costs arise.
Balance growth. Without careful management, a growing business can easily spin out of control. Therefore, you must try to match revenue with expenses to determine what opportunities represent the best form of return.
Don’t assume that growing revenues will make your venture immediately cash positive. To ensure a positive cash position, you will need to control all costs. A good strategy is to develop cost-cutting or cost-avoidance goals.
Control relationships. A company that is growing is constantly changing and evolving. Times of change can create uncertainty for both clients and employees. It is important to manage relationships with employees, business partners, customers, and colleagues through constant communication. Keeping everyone informed will provide them with a better understanding of the direction the company is heading.
Measure and evaluate. Measurement is imperative. Before you proceed with a growth plan, establish benchmarks that can act as points of comparison, such as previous results or industry averages. Once you see how your company measures up, you can evaluate your success and look at ways to improve or enhance your future performance.
This article is provided by Lauri Binius Droster, CFP, AWM, The Droster Team, a financial advisor at RBC Wealth Management, 10 East Doty St., Madison, WI. The information included in this article is not intended to be used as the primary basis for making investment decisions. RBC Wealth Management does not endorse this organization or publication. Consult your investment professional for additional information and guidance.
RBC Wealth Management is a division of RBC Capital Markets, LLC, member NYSE/FINRA/SIPC.
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