Growing your business
Growing your business can be one way to increase your profits and become more successful. To get there, you’ll need to plot a clear course between where your business is now and where you want it to be. Use our guide to help you develop your strategy for growth and create business and marketing plans to support your business journey.
It’s important to plan your growth strategy with care. If your business is slow to change – say by not keeping pace with changing customer needs – it may come to a complete stand still. If it changes too rapidly you could risk spreading your resources too thinly and diminish the quality of your products or service.
Start by getting your business into good shape so you are ready to make the most of the opportunities available, for example by cutting costs where possible, getting paid faster by customers or improving productivity. You may also want to start saving profits to help prepare for potential expansion.
You might also need a growth plan to help you overcome changing circumstances such as:
- reduced sales
- loss of customers
- increased competition.
In these sorts of circumstances, you want to put in place an effective way of improving your situation through growth. For example, you may want to try one or a combination of these approaches:
- sell more to existing customers
- find new markets and new customers
- offer new products and services.
Strategy and market research
Before you draw up your strategy, first you’ll need to research the marketplace to find out:
- The level of demand for the products/services you offer.
- What makes your competitors successful?
- What drives your customers to buy from you rather than the competition, and if and how their needs are changing?
- More about your suppliers, the quality they provide, the credit they can offer and the supply guarantees they can provide.
- How the landscape your business is in is changing and evolving. For example, what are the emerging trends and latest technologies? How will market conditions affect things, if at all?
For each area, think about what you do well, as well as your potential weaknesses,and the opportunities and threats to your business. This is known as a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). Consider all aspects of your business, not just your products or services. You should for example evaluate staffing, skills, systems, financial controls and support mechanisms, new market places, regulatory changes and so on. It’s a good way to analyse your business and identify what gives you an advantage in the marketplace and how you could improve.
Your SWOT analysis will also potentially give you insights into identifying strategies to achieve your goals. It could also be worth performing a gap analysis which looks at where your business is now, where it wants to be and how to bridge between these two states.
These can help you formulate your growth plan.
Your business plan for growth
This should be a dynamic document which outlines your vision for the future of your business. A good business plan will:
- Force you to take an objective look at where your business is going.
- Produce a clear action plan with a strong sense of direction including deadlines and desired outcomes.
- Show you understand the potential costs and investment required to achieve your goals.
- Convince financial backers that you understand your business and its position in the market and can satisfy customer needs.
- Identify targets and help you measure your success.
- Show your commitment to future development.
You will need to update your plan dynamically to fit the changing needs of your business and how well you are delivering your plan.
Please see our useful guide on Writing your business plan to find out more
How you will achieve and maintain growth.
Your marketing plan should complement your business plan. It should show how you will achieve and maintain your growth, whether that’s mainly by winning more business from current customers and/or attracting new ones.
You need a good grasp of:
- Who your customers are, where they are and why they buy from you.
- What your customers want and how you are going to provide it.
- How you’re going to encourage your customers to buy.
- Whether you’re focused on gaining a few high-paying customers, or generating trade from more customers with lower budgets.
- Whether you intend to encourage repeat business, by offering incentives for instance, or concentrate on recruiting new customers.
You’ll also need to judge:
- the amounts customers will buy
- when they will buy and at what price
- what channels they will use to buy – direct, online, through third-parties
- how much you’ll need to spend on marketing to get them to buy.
Your marketing plan will show the quantities of goods and services you need to produce in order to reach your targets. You’ll need to think about this holistically including budget, staffing, premises and equipment.
You'll have to work out:
- Who can provide the increase in production of goods or services – whether you have all the skills in-house or whether you’ll need to call on third-party suppliers or how else you will increase capacity.
- 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.
- If you need new management structures or to change the roles of those people who will be implementing your plan.
- How to manage staff to enable them to dedicate time and effort to the expansion plan.
Improving efficiency and productivity can often help raise your output. But for significant growth you’ll usually need to invest in the physical assets you use to produce your goods or services.
To get an accurate picture of what you’ll need, regularly review your projected needs in the short, medium and long term and plan any investment to keep pace with increasing volume.
If demand for your products or services is seasonal or irregular, track the peaks and troughs over a period of time to identify any patterns. Then you can 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 show you the results of carrying out your plan in particular timeframes taking into account any additional costs.
Consider how you are going to fund growth. Have you got profits put away to invest? Will you need to borrow to invest in new equipment and premises? What will be the impact of taking on debt on your finances and cash flow over both the short and long term?
If you are looking for a loan or other kinds of funding the lender will want to see clear plans about your expansion, how achievable your targets are and that you can afford to pay back what you borrow. A clear business model plan will help you here.
Your business model
You can develop a business model by pulling together all of your planned incomes and costs, based on your strategy, business and marketing plans – your accountant should be able to help. It will also:
- Identify any shortfalls in cash flow and funding you’ll need to achieve your growth plans.
- Detail your proposed profit or loss for the months and years ahead.
- Provide you with your balance sheet.
Monitoring business performance
When your plan for growth is complete, it can 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 results you’re looking for.
By communicating your plan to all business areas, each employee knows the part they have to play and can work towards the same goals.
You’ll need to review your performance against your plans to keep on track or help develop alternative strategies if you encounter any hitches. Key to managing growth is managing cash flow.
Give your business the room it needs.
Once your business begins to grow you may need more staff, facilities and equipment to cope with demand. To give your business the room it needs you may need to consider:
- Extending your existing premises
- Keeping the existing premises and adding an additional site
- Relocating your business to a completely new building.
Remember to take into account 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 without costing you for space you won’t use. Remember too, to take into account the potential costs of running larger premises, such as utility bills and business rates/non-domestic rates.
Buying versus leasing
Property can be purchased freehold or leasehold. Leasehold could offer greater flexibility and the ability to update your premises more frequently, but could increase your costs overall. Freehold gives you the freedom to use the building as you wish, within the law. For more information on the pros and cons of each, see our guide to Business Premises.
The right location
If you plan to expand into new premises, make sure you choose a location that works for as many aspects of your business as possible. As well as checking the necessary planning consents, you should consider:
- How accessible to does your property need to be for customers and/or suppliers?
- Do you need to be near good transport links, including airports if you trade internationally?
- How convenient will the location be for you, your existing staff and any new staff you take on?
- If you can’t avoid having several sites, how important is it that they are near each other?
- 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 challenging?
- Would your business benefit from a position near other respected brands?
- Could environmental factors such as noise or pollution from your business be an issue?
Facilities and amenities
- Will you need parking, meeting rooms, reception areas, warehouse space and storage?
- If you’re looking at a business park or serviced offices, what shared facilities are available?
- Is there sufficient gas, water, electricity, drainage and broadband to service your needs?
Your relationship with your workforce
In a small business you can be hands-on, involved in every decision. As you grow, and take on more staff, things will change. Be prepared to:
- Change your role: you’ll need to delegate responsibilities and decide how you want to be viewed by your team.
- Manage recruitment: when taking on new employees, you’ll need to avoid them being seen as a threat to your existing workers.
- Communicate internally: as the business changes make sure your staff feel involved, supported and listened to.
As you start to grow you may need specialist expertise in certain areas. Unless you need full-time, long-term help, then it can be more practical and cost effective to outsource.
Typical business functions that can be outsourced more easily are:
- Accounts, legal and finance.
- Marketing (including Internet services).
- Technical support.
Outsourcing allows you and your staff to focus on your main objectives, but it could also mean giving up a degree of control. Try to monitor performance closely by:
- Appointing a key contact between outsourced functions and the business.
- Keeping an open line of communication.
- Obtaining written agreements and quotes whenever possible.
- Setting clear objectives and deadlines.
You should regularly review the arrangement to ensure it meets your needs and meets the quality and standards you expect.
Other useful information
Yes Business Can. – Start Up, Scale Up, Go Global – a business guidance book for entrepreneurs. Download your free copy.
While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Bank of Scotland for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.