Many business owners fall into the trap of rapid expansion when the market isn’t primed. When you start making a profit and see that your sales have grown, it’s easy to get excited. But rapid growth early on can cause damage later if your business sales can’t keep up. Peaks and troughs happen. Don’t mistake a good year with a continuing trend. After all, extra spend can empty your reserves and leave you vulnerable.
Every business needs to grow to survive. That growth needs to be sustainable in the long term. So it makes sense to hire more people, move to a bigger premises, and buy in bulk. However, each of these moves is also a huge financial commitment. Redundancies cost money, property rent costs money, and big orders for stock need to be paid on time.
Have you truly maximized the potential of your current assets? A move to a new property could be avoided for a while as you get to know your market better. Clear out the clutter, and get rid of any equipment and stock that is blocking up valuable workspace. Hire a rubbish removalist to free up all the space you need. This is much cheaper than moving to a property that you may not be able to sustain in the long term.
Can your staff take on additional responsibilities? Perhaps they’re ready for a new role? Promotion can be a motivator for your employees to do well and work harder. They may be able to do the jobs you’re seeking to fill with fresh recruits. Temp agencies can also help fill some of your roles without commitment if you want to test a new business model or human resource. That way you’re not tied into pensions, taxes and legal requirements associated with a permanent employee.
Every start-up business should have a business mission statement. When was the last time you reviewed yours? Now could be the ideal time to check what your goals have been since the start. Where did you want to be by now? And what did you want to provide for your customer? If your values today differ from those at the beginning, you need to consider rewriting them or stripping back so you can meet them.
As businesses grow rapidly, solutions of convenience are often put in place. There may have been little regard for their future sustainability. Now is the perfect time to strip away all the inefficiencies in your business. Assess staff duties, methods, and procedures. Are there better, simpler ways of working? Could a new business model work here? Have you overcomplicated how customers are served by you? Are all customers treated the same way, or do you prioritize the higher value ones?
Sometimes you need to assess where you are to appreciate truly how you got there. Rather than pushing hard for growth, it could be more important to determine if what you’re doing now is as effective as it could be. Want to avoid getting into dire financial straits? Why not perform some market tests to ensure your product or service can remain viable for growth.
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Vinh Van Lam & Stuart Horrex
Your Coaches CoSydney & ArtSHINE