IF YOUR BUSINESS has yet to fulfil it’s potential, 2016/17 could be the time to plan for business growth.
However, before you rush into planning how to grow your business, let’s understand how business growth works and put it into perspective.
A good starting point is to understand that most micro and small businesses tend to grow in stages, rather than in a linear way. This is an important point to understand if you are going to plan your resources, tasks and activities effectively.
Stages of business growth
Micro and small businesses tend to grow in stages. There is usually an initial period where revenues and profits grow and when the growth can no longer be sustained, revenues and profits will level out and probably plateau. As shown in this chart.
Later, at some point in the future, after the business has got used to and is successfully managing the higher levels of activity and has introduced new ways of working, such as a new marketing or sales strategy, another period of business growth can begin.
Tasks and activities that will fuel the next stage of growth can now be established and worked on.
The subsequent growth in revenues and profits will inevitably be followed by more levelling out. And so the cycle continues.
The problem with growth
Serious problems can arise when the cycle of growth is broken e.g. revenues and profits get stuck on a plateau of no growth for a long period.
A stalled business can be identified from a number of indicators including, a lack of new business opportunities to follow up, slowing or flat or declining sales revenues and profits.
From the point you identify that your business is stalling or has stalled, following a recent period of growth, you need to take action and invest time and resources to work on initiatives that are specifically designed to kick start the next period of growth for the business.
A stalling business often carries over direct and indirect costs that were associated with and justified by the recent cycle of growth and can be a major problem, if those costs are not reduced or cut-out while sales revenues and profits are stalled or plateaued.
Business owners / directors and their team will need to be focused and working on the important tasks and strategies that will fuel the next stage of business growth.
There is a saying you may have heard – ‘If you are not growing, you are going backwards’. Whereas I don’t fully agree with this, there is an element of reality in what it suggests, particularly, it’s implied warning about the consequences of not matching rising costs with rising sales revenue and profits, for which, you will need to grow your business…