How to grow your business.

Transcription

1 How to grow your business. Supporting you on your business journey. The aim of most businesses is to increase profits, and sometimes expansion could be the best way to achieve this. To steer your business towards growth, you need to have the appropriate plans in place. These will take account of where your business is now, and look at where it s going and how it s going to get there. This guide looks at the fundamental steps in your journey to growth, including: Developing your strategy for growth. Writing business and marketing plans. Putting your plans into action.

2 Developing your strategy for growth. Getting ready to grow. If the pace of change in your business is too slow, it may stagnate. For example, you may fail to keep up with changing customer needs. Or, if your pace of change is too fast, you run the risk of making your business vulnerable in a competitive marketplace, by stretching your resources too thinly. To ensure that your business is ready for expansion, you need to plan your growth strategy carefully. Strategy and market research. Your strategy is a high-level assessment of your business which becomes a simple, concise statement of what you are going to do. In formulating your strategy you need to research the marketplace thoroughly and develop an understanding of: The level of demand for the products/services you offer. Your competitors what makes them successful. Your customers what drives them to buy the goods and services you provide, why do they come to you rather than the competition, and how are their needs changing. Your suppliers the quality of their goods and services, the credit they can offer and the supply guarantees they can provide. Your sector how it is changing and evolving, including emerging trends and technologies. For the areas above, consider where your business is strong, where it is weak, what opportunities the market presents and also what threats there may be to your business. This is known as a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). It s a useful way of reviewing what shape your business is in, what gives you an advantage in the marketplace and what needs to change. Writing a business plan for growth. This dynamic document outlines your vision for the future of your business, looking at where you are now, where you want to be by a given date and how you intend to get there.

3 A good business plan will: Force you to make an objective appraisal of where your business is going. Give you a sense of direction and a clear action plan. Prove to financial backers that you have a clear understanding of your business and its position in the market. Set targets and allow you to measure your success. Demonstrate your commitment to future development. Writing a marketing plan for growth. Your business plan sets out your strategy for achieving growth, and an important element of that overall vision is your marketing plan. Your marketing plan shows how you will deliver and maintain growth by gaining more business from existing customers and/or attracting new ones. A targeted marketing plan, based on market research and knowledge of your existing customers, will help raise your profile and generate income. You need to develop a strong understanding of: Who your customers are and why they buy from you. What your customers want and how you are going to provide it. How you re going to deliver messages that encourage your customers to buy. Whether your customers growing with you, or whether they represent a decreasing proportion of your business. Whether you want a few high-paying customers or a large amount of trade from customers who spend less. Whether you want to offer incentives for repeat business or to recruit new customers. As part of your marketing plan for growth, you need to estimate: The amounts customers will buy. When they will buy and at what price. How much you ll need to spend on marketing to get them to buy. Your business model is likely to go through several different versions as you make changes to your strategy, business plan and marketing plan, but ultimately it will settle down into your defined plan for the period ahead.

4 Resources. Your marketing plan will give you the quantities of goods and services you need to produce in order to reach your goal, but you also need to work out: Who can provide them. Where the raw materials are going to come from (whether they are people or actual goods). How and where the goods or services are going to be produced and delivered. Capacity. You can increase your output by improving overall efficiency and productivity, but real growth usually requires investment in the physical assets you need to produce your goods or services. To ensure you don t underestimate or overestimate your requirements: Review your projected needs in the short, medium and long term. Plan your investment to keep pace with increasing volume. If demand for your product or services is seasonal or irregular, track the peaks and troughs over a period of time to identify any patterns. This will allow you to take advantage of opportunities when you are under capacity, or to take on extra resource for busy periods. Your financial forecast. A financial forecast will tell you what will happen if you carry out the actions outlined in your plan. Develop a business model. Your business model will pull together the details of all of your planned incomes and costs, based on your strategy, business and marketing plans. This can be worked on with the help of an accountant. Your business model will also: Identify any cashflow funding requirements that you need to bring your growth plans into effect. Provide you with your proposed profit or loss for the months and years ahead. Provide you with your balance sheet.

5 Monitoring your business s performance against the defined plan. When your plan for growth has been fully formulated and formalised, it could be used as the basis for running your business. You now know what you want to do, how you are going to go about it, and what you intend to happen as a result. Your strategic, business, marketing and financial plans can be documented and communicated to all business areas, then each employee knows the part they have to play and can works towards these goals. You will need to put in place regular reviews of performance against your plans to make sure you keep on track or, where you identify obstacles to your planned growth and success, develop alternative strategies and plans to compensate. Putting your plan into action. Your business premises. As your business becomes more successful, you may need more staff, facilities and equipment to cope with demand. You can increase the size of business premises in one of three ways: 1. Extend your existing premises. 2. Keep the existing premises and obtain an additional site. 3. Relocate your business to a completely new building. In each case, you will need to consider the impact on staff, customers and suppliers. You should also be careful not to overstretch your finances. Your premises need to allow for future growth, but you don t want to pay for space you won t use. Leasehold or freehold? Property may be purchased freehold or leasehold. If there s an option, you need to decide which is best for you. Leasehold may offer flexibility and the ability to update your premises more frequently, but this could increase the overall cost. Freehold, on the other hand, gives you the freedom to use the building as you wish, within the law. For more information on the pros and cons of leasing compared to buying the freehold, see our guide Getting the right premises.

6 Location. If you plan to expand into new premises, make sure you choose a location that allows you to optimise as many aspects of your business as possible. Ensure that the premises have the necessary planning consents, and consider the following: 1. How accessible does your property need to be for customers and/or suppliers? 2. Do you need to be near good transport links, including airports if you trade internationally? 3. How convenient will it be for you, your existing staff and any new staff you wish to take on? 4. If multiple sites are unavoidable, do they need to be near each other? 5. How much competition will you face in your chosen location? Are there competitors already in the area? Will this help bring in customers or make things more of a challenge? 6. Would your business benefit from a position near other respected brands? 7. Could environmental factors such as noise or pollution from your business be an issue? Facilities. What parking will you need? Will you need meeting rooms, reception areas, warehouse space and storage? If the premises are on a business park, what facilities are available on a shared basis? Amenities. Is there sufficient gas, water, electricity and drainage? Your relationship with your workforce. While your business is small, you can retain complete control and a hands-on style of management. As numbers grow, your relationship with your staff will change. There are three key areas you should focus on: Your role: as the business expands, you will have to relinquish some of your existing responsibilities and decide how you want to be perceived in the new structure. Recruitment: taking on new employees has to be managed carefully. Your existing workforce may see newcomers as a threat. Internal communications: during periods of change in particular, your staff will want to feel supported and listened to. External support/outsourcing. In the early stages of expansion, you may require additional expertise in your business. Rather than take on full-time staff to cater for this requirement, it may make practical and financial sense to outsource.

7 Outsourcing may ease pressures internally and allows you and your staff to focus on the primary objectives. Aspects of business which often lend themselves well to third-party management include: Accounts, legal and finance. Marketing (including Internet services). Advertising. Technical support. Recruitment. Outsourcing inevitably involves losing a degree of control, so establish procedures that allow you to monitor performance as closely as possible. These should include: Appointing a key contact between outsourced functions and the business. Keeping an open line of communication. Obtaining written agreements and quotes whenever possible. On a regular basis, you should also: Set deadlines. Review quality and standards. Re-evaluate your needs and re-assess arrangement.

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