26 Jul Taking Your Business To The Next Level July 2022
Growth is important when it comes to business. To remain viable most companies need to keep evolving, staying ahead of their competitors and innovating to meet the needs of a continually changing marketplace. It’s also personally gratifying to feel a sense of progression and be rewarded for the hard work that is part of running a successful business. There are some considerations, however when it comes to achieving growth as not all growth is created equal.
Business growth can be measured in a variety of ways. While there is inevitably a focus on turnover and revenue other metrics can be used to measure, manage, and communicate results. Alternative financial metrics that can be used to track growth include sales and earnings growth figures, while non-financial indicators can also be effective measures of growth such as market share, customer loyalty and product quality or range. It’s important to reflect on what growth means to you and what measures of growth apply to your business objectives.
Decoupling scale and growth
It can be common to think of growth in terms of size – larger premises, increased number of personnel or greater manufacturing capacity – but it’s important to recognise that bigger does not necessarily mean more profitable. Bridgestone is the largest tyre manufacturer in the world according to market share and manufacturing figures. However, German manufacturer Continental records profits that are triple that of Bridgestone. What it lacks in scale, it makes up for in lower manufacturing costs, standardised processes, and more lucrative customers.
These companies have both pursued different growth strategies and while there are certainly benefits associated with increased scale of operations, it is possible to focus on growing revenue without scaling up much or even at all, by implementing efficiencies to reduce overheads.
There are also some advantages associated with being smaller. It can be easier to maintain a strong customer service focus and you tend to have greater autonomy and control, for example being able to be discerning about what projects you take on and make decisions without being answerable to a board or shareholders. One additional compelling advantage in today’s economic climate is being able to respond quickly to pivot and adapt to changing market conditions, something the big players can struggle with.
Many paths lead to growth
There are almost as many schools of thought as to the best ways to achieve business growth as there are businesses and it can be quite overwhelming trying to decide what’s right for you.
The primary types of growth a business can experience include:
Organic – focussing on increased products and services.
Strategic – looking at various measures to achieve longer term growth.
Internal – involving using currently available resources in a better way.
Partnership/ merger/ acquisition – can help businesses to enter, sustain and grow in a new market.
Considerations when pursuing growth
Growth that is not carefully managed can lead to resources being spread too thin, impacting staff morale, leading to customers feeling neglected and, in some cases, lower profits.
Pursuing growth can require investments in people, equipment, space, and suppliers. As these outlays occur before any potential increase in revenue, many businesses find themselves under pressure financially. On that note it’s important to manage your cashflow carefully. Effective credit management and tight control of overdue debts are essential.
Finally, one of the most powerful things you can do when aiming to grow your business is put your plan for growth down on paper. That takes business growth from being something that’s trickling away in the background to something you are actively and strategically pursuing.
Onwards and upwards!