Growing a business can be hard to get right. After all, business growth comes in so many shapes and sizes that it can look entirely different from one business to the next.
However, in our experience working with business owners across all sorts of industries, we’ve found that those who understand the difference between planned and unplanned business growth are a step ahead of the rest.
What is planned business growth?
Planned business growth is achieved via a business growth strategy, which provides a timeline and action plan for how a business can increase revenue over a defined period of time.
Planned business growth is usually characterised by the following:
- A defined pipeline of work and opportunities;
- Strong prospects of winning this work (if not already won);
- Solid understanding and access to the skills and resources that will be required to deliver this work;
- Adequate capital that allows for calculated risk-taking
- Aligns with business goals and objectives
What is unplanned business growth?
On the flip side, unplanned growth is when you can’t deliver on the work you have signed up for. It is typically characterised by:
- Having lots of leads but an uncertainty around when or if they will convert;
- Having more work than your team can handle;
- Constantly saying no to work because you are missing key skills or resources to deliver it; and
- Limited funds to invest in the business
In short, it is unsustainable business activity and could ultimately result in business decline due to a reduced quality of work.
Is all growth good growth?
While business growth is undoubtedly a good position to be in, regardless of the form it takes, growth for growth’s sake should be avoided.
We encourage almost all of clients to ensure their growth is linked to increased profitability.
As the saying goes: “revenue is vanity, profit is sanity and cash is reality.” Don’t neglect the numbers that really matter. Cash is the lifeblood of any business and things can dry up very, very quickly if you aren’t properly managing it.
In our books, stable, sustainable growth will trump rapid business growth almost every time. However, with that being said, even meticulously planned growth strategies come up against unexpected obstacles.
Here are top tips on preparing for business growth, regardless of the form it comes in:
1.Make a plan.
Even in an unplanned situation, you need to have a plan. If you have a business mitigation strategy, expand it to include the possibility of future work.
2.Know your priorities.
Make sure you understand what needs to be delivered when and what things can be adjusted or moved without disappointing your clients. Strong client relationships are critical to navigating periods of growth successfully.
3.Have the right people around you.
Equally, having the right employees and partners around you is essential. It pays to have a core group of multi-skilled individuals who are loyal, hardworking and adaptable, and to stay in touch with people who you may need in the future.
4.Save some cash.
Find a way to do this even if it means you need to take less profit in some years. From a financial point of view, you need to be able to plan for future growth and having cash on hand to service this growth is half the battle.
HOW WE CAN HELP
Planning the future growth of your business starts with an accurate understanding of your existing operations.
Myssy + Co can provide an expert independent view of your business operations in order to help you:
- Develop a business plan that outlines your goals and objectives in the short, medium and long term
- Achieve a full understanding of your cash flow and profitability
- Understand your structuring and restructuring options
- Plan the move to your desired future state with expert advice