Growth is essential to any business. Why? If your firm is not growing then it is losing ground to its competitors. In some instances, the firm will be able to attract better staff as a result of being a more efficient and significant player in its chosen market. Other benefits provided by growth are the additional profits that can be used towards developing the firm and its products and services.
There are also downsides to business growth that can make a business less profitable, and even destroy a business altogether. Rapid expansion carries the risk of making your business unmanageable, more costly and less efficient. Depending on the type of firm that you run, the difference between growing 10%, and growing 25% may require you to increase your staff numbers, as your current workforce may be unable to handle the additional workload. In addition, growth may require larger premises and additional IT infrastructure. This means higher running costs and a requirement for increased cashflow in order to maintain profitability.
Plan
Therefore, in order to grow a business effectively it is necessary to plan ahead. This requires an understanding of the levels of spare capacity in your existing workforce. If your staff are not operating at 100% capacity, there may be an opportunity to grow the business by 10% without investing in additional personnel. However, if your growth aspirations are larger, for example 35%, you will need to consider your strategy more carefully.
Financial
On the financial side, you will need to determine the additional capital expenditure required. You will need to consider staff costs, operating costs such as stock, electricity and premises. You may also have to budget for additional management resources.
Time
Time is another factor. Management must have the requisite time to manage the process of expanding the firm. If senior managers are tied up with managing key clients, the expansion will not go to plan as key people will not have time to focus properly on the growth of the firm.
Market
Market forces should also be taken into account when planning to implement a growth strategy. You will need to consider where the additional sales will come from. Your marketing plan will need to detail how you will go about attracting the new sales and repeat customers which will generate the cashflow needed to expand the business. If your competitors are dominating the local market, you may struggle to increase your sales and may have to consider alternative marketing plans such as selling online.