Are you thinking about accelerating your business growth? Buckle up, as we’re going to discuss the double-edged sword of entrepreneurship.
Most business owners I speak to, around two out of three, want rapid growth within their business to make it stronger and more profitable. However, when pursuing any growth strategy, it’s crucial to have a plan.
I’m not suggesting you write a 59,000-page business plan like in the old days. Your plan could be a one-pager, three to four pages, or a detailed forecast. Without a plan, you’ll struggle to achieve successful, rapid business growth. I’m not advocating spending months planning without executing, but having some form of documented plan is essential. This allows you to refer back to your plan regularly, as it’s easy to get sidetracked putting out fires in the day-to-day operations of a business. Every decision and action should bring you closer to your plan’s objectives.
The Benefits of Fast Business Growth
The advantages of a fast-growing business are enticing. You’ll see increased revenues, a larger team, and potentially more exciting products or services, fuelled by enthusiasm and a buzz around the growth. Ultimately, you’re looking to build revenues faster than increasing costs, leading to higher profits. Revenue growth can be broken down into two key areas: how much you’re invoicing customers (average transaction value) and how often you’re invoicing each customer.
While income drivers may vary across industries, understanding these key metrics can help you grow your business further.
The Cons of Rapid Business Growth
Rapid growth can also be quite stressful. Instead of coasting along doing what’s comfortable and easy, you’ll have a load of new challenges on your plate. You’ll be bringing on new team members, and ensuring they fit your company’s values and meet expectations can be demanding. When building new processes and systems, there will be fires to put out as things need tweaking, maintenance, and enhancements.
The Investment Required for Growth
Growing a business takes investment, whether through external funding (loans, private equity, etc.) or reinvesting profits (bootstrapping). There’s no right or wrong approach as long as it aligns with your plan. As you grow, the business often gets paid last, with cash going out for new team members, equipment, products, and working capital needs. Having a tight handle on profit (the numero uno priority) and cash flow is crucial, as running out of cash could mean losing suppliers, products, or even your team.
The Importance of Planning and Reviewing
I can’t emphasise enough the importance of having a plan. While no plan survives battle, and forecasts become outdated quickly, having something to aim for prevents you from shooting in the dark. Regularly compare your actual performance against your plan – are you on budget, on time, and meeting customer expectations? Track non-financial metrics like customer feedback, as these numbers often drive a business’s success more than financials.
If you have any questions, feel free to book a call with our team using the link below – no pushy sales pitch, I promise.
