Growing a business is an exciting but challenging process that requires careful planning, strong leadership, and a commitment to continuous improvement. To achieve long-term success, you need to focus on a range of key considerations, including market research, strategic planning, financial management, marketing and sales, team building, and continuous improvement.
By prioritising these areas and working towards specific goals and objectives, you can build a strong foundation for growth and position your business for success in today’s competitive marketplace. In this article, we will explore each of these key considerations in more detail and provide practical tips for achieving business growth and success.
Essentials for Growing a Business
While there are many ways to grow a business, here are a few at the top of the priority list.
- Market Research: Before making any major changes to your business, conducting thorough market research is important. This involves understanding your target audience, analysing your competitors, and identifying opportunities for growth and expansion.
- Strategic Planning: Once you have a solid understanding of the market, creating a strategic plan for growing your business is important. This plan should outline your goals, objectives, and the steps you’ll take to achieve them.
- Financial Management: Growing a business requires significant time, energy, and financial resources. It’s important to have a strong understanding of your finances and a solid plan for managing your cash flow, securing funding, and making smart investments.
- Marketing and Sales: To grow your business, you’ll need to increase your customer base and generate more revenue. This requires effective marketing and sales strategies, which could include digital marketing, networking, and other promotional activities.
- Team Building and Leadership: As your business grows, you’ll likely need to hire more employees and build a strong team. This requires effective leadership and management skills, as well as a clear vision for the future of your business.
- Continuous Improvement: It’s important to evaluate and improve your business processes and strategies continuously. This involves gathering feedback, analysing data, and making changes as needed to ensure ongoing growth and success.
The Importance of a Customised Business Plan
These elements for business growth come together with a plan. Having a business plan is essential for any organisation as it provides a clear roadmap for achieving business goals and objectives. A good business plan ensures your company stays aligned with its original mission and goals.
A business plan can be customised to suit your company’s specific needs. You can easily refer to your business goals and objectives by putting succinct points on paper. Writing down these points helps organise thoughts, prioritise tasks and identify possibilities, as well as risks, for a business.
It is recommended that business plans undergo a yearly review and potential revision, particularly for newer enterprises and growing businesses. The process of updating a business plan is often more targeted and enjoyable than creating the initial version.
Expanding Your Business
Growing a business requires a multifaceted approach.
Growth strategies may seem overwhelming. Each one plays a crucial role in driving growth and success. By carefully considering each option and identifying the best strategies for your business, you can create a roadmap for growth and position your business for long-term success.
Let’s consider each of these strategies in detail and provide practical tips for implementing them effectively.
- Expand Your Product or Service Offering: Consider expanding your product or service offering to attract new customers and generate additional revenue. This could involve developing new products or services, or creating complementary offerings related to your existing offerings.
- Increase Your Market Reach: To grow your business, you’ll need to increase your market reach. This could involve expanding your geographic footprint, targeting new customer segments, or launching marketing campaigns to raise brand awareness and attract new customers.
- Build Strategic Partnerships: Partnering with other businesses can help you expand your reach and gain access to new customers. Consider partnering with complementary businesses to create mutually beneficial relationships.
- Invest in Technology: Technology can be a powerful tool for growing your business. Consider investing in new software or systems that can help streamline your operations, improve your customer experience, and increase your productivity.
- Improve Your Customer Experience: A positive customer experience can be a powerful driver of business growth. Consider ways to improve your customer service, create a more personalised experience, or offer additional value and benefits to your customers.
- Create a Strong Brand: Building a strong brand can help you stand out in a crowded market and attract new customers. Focus on creating a distinctive brand identity that resonates with your target audience and invest in marketing efforts to raise awareness of your brand.
- Acquire or Merge with Other Businesses: Acquiring or merging with another business can be an effective way to rapidly grow your business. However, this approach can also be risky, and it’s important to carefully evaluate potential partners and opportunities before making any major moves. More on this later.
- Focus on Employee Development: Investing in your employees can help you build a strong, capable team that can drive your business forward. Consider offering training and development opportunities, creating a positive work environment, and rewarding top performers to motivate and engage your team.
Accelerate Growth with Mergers and Acquisitions
In the previous section, we referenced the growth strategy of merging or acquiring a business.
A merger is a process where two companies combine their operations to form a new, larger company. This can be done for various reasons, such as expanding into new markets, increasing market share, or improving operational efficiency. Mergers can create significant synergies by combining the strengths of both companies, such as their intellectual property, customer base, and distribution channels. However, mergers can also be complex and costly, often requiring extensive due diligence, negotiations, and regulatory approvals.
An acquisition is a process where one company purchases another company. This can be done to acquire new technologies, intellectual property, or customer bases. Acquisitions can also help a company to eliminate competition, increase market share, and diversify its revenue streams. However, acquisitions can be expensive and risky, as the acquired company may have different organisational cultures, business models, and financial structures. Integration and cultural fit are critical considerations when evaluating acquisition opportunities.
Both options have advantages and disadvantages, and the best approach will depend on your company’s goals, resources, and competitive landscape.
Using a Broker
The complexities of conducting a merger often warrant the employment of a broker.
There are a variety of reasons to use a broker.
- Access to a larger pool of potential partners: A broker typically has a network of potential merger partners, which can increase the chances of finding a suitable match for a company’s merger objectives.
- Expertise in deal making: A broker can help navigate the complexities of the merger process, including valuation, negotiations, and due diligence. They can provide guidance on deal structuring, financing, and legal issues.
- Confidentiality: A broker can maintain confidentiality throughout the merger process, which can be critical for avoiding disruptions to the business, protecting proprietary information, and avoiding market speculation.
- Time savings: A broker can help accelerate the merger process by managing the process, coordinating with potential partners, and handling administrative tasks.
- Increased deal value: A broker can help maximise the value of the merger by identifying synergies, negotiating favourable terms, and optimising the deal structure.
Of course, there are also potential drawbacks to using a broker. Their services, potential conflicts of interest, and a loss of control over the merger process can limit success. Speak with your Accountant as they will be able to refer an appropriate broker in their network to assist.
Growth Can Mean Restructuring
A company often needs to undergo a restructuring when it makes major alterations to its financial or operational framework, usually during times of financial hardship. However, restructuring may also occur when a company is planning for a sale, buyout, merger, shift in its overall objectives, or transfer of ownership. This is a consideration when growing a business because the original structure may no longer be appropriate.
If you have a business with different revenue streams, then you may require additional entities. For example, a company that offers both consulting services and sells physical products may choose to create two separate legal entities: one for consulting services and one for product sales. This allows each entity to focus on its specific activities and manage its own risks and liabilities. Additionally, it may make accounting and tax reporting more manageable.
Restructuring is important when growing a business because it allows a company to adapt to changing market conditions and maintain its competitiveness. As a business expands and evolves, its financial and operational needs can become more complex, requiring changes to its structure to support its growth. Your accountant can help determine an appropriate structure depending on the objective.
Factors to Consider as Your Business Grows
Business expansion puts pressure on all parts of the business. These need to be managed accordingly.
- Cash Flow: Cash flow is one of the most important factors to consider when growing a business. It’s important to clearly understand your financials and a plan to manage cash flow, including accounting for any delays in payment from customers or suppliers. In addition to managing delays in payment from customers or suppliers, it’s important to consider the timing and potential mismatch between putting on new staff, acquiring new stock, and the conversion of these investments into sales. These investments can require significant cash outlays upfront, and it may take time for the investment to generate revenue and ultimately contribute to positive cash flow.
- Scalability: A business may be able to grow quickly in the short term, but it’s important to consider whether the business can sustain that growth over the long term. It’s important to think about the scalability of your business model, and to make sure you have the resources and infrastructure to support ongoing growth.
- Cultural Fit: As a business grows, it’s vital to maintain a strong company culture that reflects the values and goals of the organisation. When bringing on new employees, partners, or customers, it’s important to consider whether they fit the company’s culture well.
- Regulatory Compliance: As a business grows, it may become subject to new regulations and compliance requirements. It’s important to stay up to date on any new laws or regulations that may impact your business, and to have a plan in place to ensure ongoing compliance.
- Succession Planning: It’s important to have a plan for the business’s long-term future, including succession planning. This involves identifying key leaders and stakeholders, and having a plan for how the business will be managed and operated in the future.
- Risk Management: Growth can also bring new risks and challenges. It’s important to have a plan for managing risk, including protection against cybersecurity threats, managing supply chain risks, and addressing any legal or regulatory issues that may arise.
- Maintaining Customer Satisfaction: As a business grows, it’s important to maintain a focus on customer satisfaction. This includes providing high-quality products and services, creating a positive customer experience, and addressing any issues or concerns that customers may have. This is crucial, as we know strong levels of customer satisfaction and retention in your business helps retain customers and also attract new customers through positive word-of-mouth referrals.
Financial Factors
Having a solid knowledge of your financial business is crucial. It’s important to ensure your original budget is updated as costs fluctuate. Then mapping these cost changes with corresponding revenue increases will help business owners forecast growth. We know growth doesn’t happen in a straight line. This is why other factors, such as seasonality, are important to consider to ensure any shortfalls in cash flow are appropriately addressed.
Here are the three main areas to note when it comes to financial considerations:
- Cash Flow: To have a solid understanding of your cash flow, you may need strategies to manage accounts payable and accounts receivable, secure additional funding, or reduce expenses. This is especially crucial when it comes to budgeting and provisioning for the quarterly Business Activity Statement (BAS).
For example, let’s say that a business expects to generate $300,000 in revenue for the upcoming quarter. They would need to calculate the estimated GST (Goods and Services Tax) liability that will need to be paid in the quarterly BAS. Assuming that the business is registered for GST, they would need to collect 10% of the revenue generated as GST. This means that they would need to set aside $30,000 as provisional GST for the quarter. More on GST reporting from the ATO here. - Investment and ROI: Growing a business often requires significant investment, so it’s important to carefully evaluate potential investments and their expected return on investment (ROI). This will involve performing financial analysis, conducting market research, and creating financial projections.
- Financial Controls: As the business grows, it’s important to have robust financial controls in place to prevent fraud, manage risk, and ensure compliance with laws and regulations. This will include implementing financial policies and procedures, conducting regular audits, and monitoring financial performance.
Using Extra Finance to Grow
You can provide your business with a cash injection in a few ways.
- Using your own funds to grow a business can be an option if you have sufficient personal savings or equity (in the business or personal property). This approach allows you to maintain control over the business and avoid the costs and risks associated with seeking external financing. However, it also means that you’re putting your own personal finances at risk and may need access to the same level of resources as external investors. For example, if you decide to use your own funds to open a new location or launch a new product, you’ll need to carefully evaluate the potential return on investment and ensure that the funds are being used effectively.
- Investor funds can be a good option if you want to scale your business quickly or need access to additional expertise or resources. This approach involves seeking funding from external investors, such as angel investors, venture capitalists, or private equity firms. In exchange for their investment, investors typically receive an ownership stake in the business and may have a say in the company’s operations and decision-making. This approach can benefit businesses looking to expand rapidly or need access to specialised knowledge or networks. However, it also means giving up a degree of control and may involve significant costs, such as legal fees and due diligence expenses. For example, if you’re seeking investor funds to launch a new product, you’ll need to develop a compelling business plan, financial projections, and market research to convince investors of the opportunity.
- Alternatively, a business may seek financing to grow through a traditional bank loan or alternative financing options such as crowdfunding or peer-to-peer lending. This approach involves borrowing funds that must be repaid with interest. It can be a good option for businesses with a track record of stable revenue and cash flow and need funds to invest in growth opportunities. However, it can also involve significant costs and may be more difficult to secure than using your own funds or seeking investor funds. For example, if you’re seeking finance to expand your manufacturing capacity, you’ll need to provide a detailed business plan, financial projections, and collateral to secure the loan.
Identifying gaps in cash flow is a critical step in growing a business. By carefully evaluating the pros and cons of using your own funds, investor funds, or finance to grow, you can make a strategic decision that positions your business for success. It’s important to be specific and detailed in your planning, providing clear examples of how the funds will be used and the potential return on investment while also considering the costs and risks associated with each option. If you’re interested in learning more about the types of financing options for your business you can watch an episode from our video series here.
The People Part
It’s important that as a business grows, you continue to match the services it offers with the right team. This can be managed through sound leadership and management, reviewing the business’s organisational structure, implementing regular training and development programs, upholding company culture and values and effective communication throughout the organisation.
- Leadership and Management: As the business grows, it’s critical to have strong leadership and management in place to guide the organisation. This may involve hiring additional staff or promoting from within, developing leadership skills, and implementing effective management practices.
- Organisational Structure: As the business grows, the organisational structure may need to be adjusted to accommodate new roles and responsibilities. This may involve creating new departments, changing reporting structures, or implementing new processes and procedures.
- Training and Development: As new employees are hired and existing staff take on new responsibilities, it’s important to provide training and development opportunities so that everyone has the skills and knowledge they need to succeed. This may include on-the-job training, workshops, or formal education programs.
- Culture and Values: As the business expands, it’s important to maintain a strong company culture and uphold the organisation’s values. This may involve creating a positive work environment, teamwork and collaboration, and communicating the organisation’s values and mission to employees.
- Communication: Effective communication is critical as a business grows, particularly as new employees are brought on board, and new processes are implemented. It’s important to establish clear lines of communication, provide regular feedback and updates, and encourage open and honest communication throughout the organisation.
It also may be worthwhile weighing up the opportunity to outsource functions within the business instead of hiring more internal staff. Outsourcing your tax compliance as well as tax advisory and tax planning can reduce your stress, give you peace of mind and save you time and money.
System Updates and Process Improvements
As a business grows and evolves, it’s important to ensure that the systems and processes in place are appropriate for its needs. What may have been appropriate when the business was first launched may not be suitable anymore. This is where documentation becomes crucial. Documenting and updating processes as the business evolves can help ensure that the right systems and processes are always in place.
Even a business with a healthy turnover can struggle if it doesn’t have an effective accounting system in place. We provide an overview of our best practice accounting systems in this video.
Outsourcing bookkeeping and other internal accounting functions is a consideration when it comes to using the appropriate systems and processes. The right team can help identify the best systems to use and ensure they are properly implemented. Additionally, an external team can be brought in to provide additional support and expertise in areas such as financial management and business strategy. This can lead to effective cost savings and efficiencies for the business.
The Right Accountant is Essential
An accountant provides valuable financial expertise and guidance to help you grow your business sustainably and profitably. By working with an accountant, you can ensure that you have a strong financial foundation for your business, and that you are well-positioned to take advantage of new opportunities for growth and expansion.
It is however notable to mention the role of the accountant has evolved, and if you’re looking for more comprehensive support, then you may require an accounting firm that both provides traditional accounting services and business advisory services.
Here are some of the main reasons:
- Financial Management: A good accountant can help you manage your finances effectively, ensuring you have a clear understanding of your financial position and helping you make informed decisions about budgeting, investments, and cash flow management. This can be especially important when expanding into new markets or making significant investments in the business.
- Tax Compliance: Tax compliance can become more complex as your business grows. A good accountant can help ensure that you are meeting your tax obligations and taking advantage of all available deductions and opportunities available in the relevant tax legislation. They can also provide guidance on tax planning and strategies to minimise tax liability. Your accountant can assist with your quarterly BAS obligations.
- Strategic Planning: A good accountant can help you create and implement a financial plan that aligns with your business goals and objectives. This can include creating financial projections, developing budgets, and analysing financial data to identify opportunities for growth.
- Business Strategy: A business advisor can provide valuable insights into the financial implications of different business strategies, helping you make informed decisions about expanding into new markets, developing new products, or pursuing other growth opportunities.
- Funding: If you are seeking funding to support your business growth, a good accountant can help you prepare financial statements and other documentation that lenders or investors will require. They can also provide guidance on the best funding sources and help you evaluate financing options.
Tip: The Australian government provides eligible organisations with generous grants, incentives and initiatives to help fund research, development and growth. At Myssy + Co we help facilitate access to these grants and assist in the preparation of documents and evidence to support your application. Read more about these incentives here.
Conclusion
To survive and thrive, your business needs to seek opportunities to grow. Businesses that continue to tread water over time will find that they are at risk of drowning.
Stagnation and complacency can quickly lead to decline and failure. For this reason, businesses must remain vigilant and seek new opportunities for growth and development.
By investing in people, systems and processes, your business will have a solid baseline from which it can grow.
By investing in market research, your business will identify growth opportunities.
By implementing sound financial practices, your business will be able to take advantage of those opportunities safely and successfully.
If you’re not sure where to begin, the team at Myssy + Co are business growth experts. We can assist you with developing your business growth strategy.