There are a whole lot of businesses being started every single day across Australia. Most make it to revenue, many make good revenue, but an overwhelming majority hit significant growth pains. They get caught in the ‘Growth Trap’.
As the economy is rapidly picking up pace the companies that are poised and ready for growth will reap the greatest benefits in the coming years. Here’s the 1-2-3-4-5 of catapulting business growth on a budget.
Think of business growth like a freight train. Except, you’re pushing it down the track with your hands and the help of a few friends. So, to begin with, it’s very hard work. You sweat. You feel like going nowhere.
Eventually, you get going. Now, as you do you want to keep pushing, gain speed, let the train start rolling. But, you still don’t stop there, run as fast as you can and keep pushing.
As you move down the tracks, people come along and help the pushing. Your sales grow so you can buy more coal to fire up the engine. But, you have to keep that momentum.
Where so many businesses go wrong is the stop-start-stop-start. You build the momentum, then take a breather and lose that momentum.
The fix: Make sure that you test before you start. Do you have a team that can push, a product that sells, a marketing machine that works? Many of these can be tested well before you really start. Once you’re ready be ready for a marathon. That’s what it takes to start with momentum.
For most businesses, you need to watch the profitability gap. You may need to produce a certain number of widgets before manufacturing is viable. Or, do a certain number of billable hours before it pays the office rent overheads.
As you expand, it gets worse: You now need to hire one or more people to do more of what you do already, or to expand activities. What if it takes two months before a sales person is up to full steam? In the meantime, you have to pay their base salary, while spending a significant part of your time with them. Sales will probably drop before they start going up!
The fix: Keep a relentless eye on revenue as your first measure, and then check that your margin is preserved as you expand. If not, think of other ways to do it: Outsourcing, contractors, revenue partnerships, JV’s etc.
3. The marketing machine
If you rely on traditional avenues of marketing, growth is a challenge. The premise is that you have to keep pushing. Push new campaigns, push sales, and so forth. The moment you stop pushing growth will wane. This is not ideal.
To create sustained growth you have to think of your marketing as a machine that keeps chugging along – just like that freight train.
The fix: Create sign up forms on your web site, automate your e-newsletters, get a low-cost helper to handle your social posts. Make sure you, as the business owner, will only do things once. In other words, ensure your marketing machine keeps producing not just leads, but prospects, so you can take your eyes off it while you focus on other areas of the business.
Can you do 50 per cent more revenue with the same team? If not, find out how you can. One of the key hindrances of growth is when you can’t expand the organisation to match the growth you need. Bringing new team members on board is expensive and, takes time. Generally, it takes a while before a new team member is fully up to speed.
The fix: Systems. Ensure you have your customer, order, finance, production and other systems in place and functioning well before you bring on board new team members or, you simply won’t get the full benefit of them coming in. Also, ensure you have procedures that new team members can rely on.
Want to count more revenue? Count it more often! If you report monthly, start reporting weekly. If you report weekly, start reporting daily. If you’re not reporting on revenue, start.
The rationale is simple: If your sales are sagging (your second indicator of growth – the first one is orders / commitments) you need to know sooner rather than later. If, after the first week in a month, you see you’re behind, you still have three weeks to catch up. If you report at the end of the month, well, it’s hard to catch up on that month.
(Image source: Bigstock)
Mike Boorn Plener is CEO and Executive Producer of Business Connector and the organiser of Business Growth 2014.
Business Growth 2014 brings together a series of speakers who knows business growth – both in their own businesses and helping other business owners grow theirs. Additionally, the event provides a challenge format where business owners can bring in their toughest challenge and have the panel of speakers help them on the spot! One evening is the equivalent of days or weeks spent with a management consultant.