After taking the leap and going it alone, you’re now the master of an established business. Progressing through the business lifecycle, you have successfully negotiated the “survive” and “break even” stages. Now it’s time to look ahead. Growing your business is next on the list. As well as careful planning, it requires an investment of time and money. Get it right and you’ll be on the path to long-term success.
Growing your business for survival
The entrepreneurial spirit is alive, well and thriving throughout the UK. There are over 400,000 business births a year in the UK. With a working population of around 32 million, that’s an astonishing rate of 1 in every 80 working adults setting up their own business each year.
However, not all of them will make it. For VAT registered businesses, around 11.6% nationally will cease trading each year. In 2016, Cambridge enjoyed the highest five year survival rate of 49%. That means that even in the best region, over half of businesses didn’t survive their first five years.
There are several key factors that separate those that survive from the rest. Your mentality and hard work has taken you this far, but you need to adjust your way of thinking to make your business more resilient and successful long-term. At this stage, resting on your laurels is a genuine business risk. It’s time to invest for the future, plan for success and develop a growth mindset.
Investing for growth
In the growth phase, bootstrapping policies no longer cut it. You should be building your team, improving your systems and considering your investment options.
Michael E Gerber wrote in E-Myth about just how important it is to get the balance right between being a technician, manager and entrepreneur. You’ll have started with massive amounts of energy, confidence and determination, but now you need to put more emphasis on planning and longer term strategy. You need to look beyond your internal resources to start building a business that could ultimately work without you.
At this point cash flow is more predictable, marketing and sales strategies are being tested and adapted, and there is a good grasp of the key financials. With this level of confidence, you can now back your business and get external funding to grow.
Planning for success
Be clear with what is achievable. Set clear goals and milestones. Expanding your business will take a lot of energy, so budget time as well as money for finding and delivering the extra sales.
Your plan for growth needs to include:
- Growth areas
- Where are you going to find the extra sales?
- Extra product lines
- New target market
- Open a new location
- New sales channel
- Where are you going to find the extra sales?
- Which channels will you use – social media, email, paid search, print ads?
- How much will they cost?
- How will you measure their success?
- Extra staff
- Budget for salaries
- Recruitment costs and time
- Onboarding and training
- How much time can you devote to it?
- Do you need extra staff or new systems to help?
- Can you outsource some activity?
Once you’ve set out all of the above you can make a solid financial plan. With all the details laid out, you can then make an informed decisions about how much extra funding you need.
Getting external investment
There are lots of different options available when it comes to external investment. There’s avenues like crowdfunding where you give up some equity to get a lump sum. Or you can take a business loan and pay it back over a few months to a few years.
Planning for growth can be difficult. However, lenders such as Funding Circle will look at what you can afford to repay based mainly on your current financials, rather than any expected growth (along with their other T&C’s). That way if the extra sales take slightly longer to achieve than you had planned, you’ll still be able to afford the repayments. Alternatively, if you do better than expected and grow quickly, you can pay off your loan early and save on the interest.
Building for success
It is great to see that the entrepreneurial spirit is alive and well. However, it’s concerning to see how unprepared and unnecessarily risk-taking many business owners can be. In my experience successful entrepreneurs marry their positive mindset with a practical approach – and make a really good plan!
You need to invest in yourself as well as your business, keep learning and have a structured approach. By looking beyond your internal resources and creating a plan for growth, you can mitigate your risk and give yourself every chance of long-term success.
Business Growth and Planning Specialist
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