Is your business ready to grow?

Taking the decision to grow your business can be both exciting and daunting so careful planning will give you the best chance of success. We’ll guide you through the process of deciding if your business is ready to grow and the different options you can pursue to achieve growth.

1. The right time to grow?

Timing is all important when looking to grow your business. You need to judge whether your business is in a good place to put a growth strategy into action.

Ask yourself:

  • How is your business performing against budget?
  • How does your business use available resource to generate profit?
  • Is your market expanding or contracting?
  • How are your competitors behaving?
  • How much readily available cash do you have?
  • Are your customers asking you to grow by asking for more or expanded services?
  • Are you keeping customers for repeat business?
  • Do you have more business than you can handle?
  • What do you need to do to future-proof your business?
  • How will your plans fit the economic climate?
  • Have you got time to focus on expansion or do other issues need to take precedence?

A sudden spike in customers shouldn’t be taken as a signal to expand your business straightaway. An increase in customer numbers might simply be due to business seasonality or another market fluctuation. Wait to see if your increase in customers is a consistent trend or just a temporary thing.

Growth doesn’t suit all businesses or business owners. But if you are considering ways that you could expand your business, you’ll need to evaluate just how scalable your business is in reality.

 

2. How to grow

There is no single best way to achieve growth so your strategy should suit your business, the markets you’re in and the opportunities you can spot.

Make sure you fully understand your customers and your sales funnel, so you know:

  • What kind of prospects and customers you are attracting
  • Why people are buying or not buying
  • At what point or points prospects fall out of the sales funnel and why
  • What prompts prospects to go on to buy and what makes that more or less likely.

Start by fixing the issues you uncover and see what impact that has on your growth. See if you can finesse your sales funnel so you have fewer people falling out, before you tackle any additional expansion. It may also help point you to problems you can easily solve.

It can be worth following up with prospects who don’t opt for your products and services to find out why. For example, was there information missing from your website or documentation that they needed to evaluate and maybe shortlist you? Did they go with a cheaper provider because they didn’t realise you could offer some flexibility on costs? Was the customer service team unhelpful or slow in responding when asked a question? Understanding any potential pain points for prospects can help you improve your response and your conversion rates.

It is always worth remembering that it is often cheaper to keep existing customers, and even better to sell more to them, than to find new ones. However, being dependent on just a few customers for a large percentage of your turnover brings its own risks. If you lose one of these customers, for example they get taken over or cease trading, it could have a big impact on your plans. So spreading risk in a wider customer base has real value and is a good reason to pursue growth opportunities.

Once you have decided on expansion you need to decide how you are going to approach it.

For example:

  • Can you retain existing customers?
  • Can you sell new products or services to existing customers by solving a problem for them?
  • Can you find new customers?
  • Can you find ways to tap into new markets such as different ways of marketing, for example trade shows or using social media or can you sell direct to customers online?
  • Do you need premises or facilities in another location?
  • Are overseas markets an option?
  • Here are some frequently used strategies:

 

Diversification

Branching into new areas can extend your brand’s reputation and its range of products and services. It can help you sell more to existing customers and reach new ones. It also offers an opportunity to move into new markets.

 

Exporting

If your UK growth has peaked you could find a whole new market abroad. Exporting can offer particular benefits by shielding you from fluctuations in your domestic market. Other countries might not be in the same part of the economic cycle, so growth in your sector may be contracting but it may be the opposite elsewhere in the world. Likewise, different seasonality may help smooth demand year round.

See whether you are ready to start exporting in our exporting guide and flowchart.

If you have decided you want to try exporting, research into different international markets to identify where might be the best places to trade.

Our International Trade Portal can also help you understand some of the practicalities you will have to deal with such as trade documentation, trade controls and how to manage shipments. It will help you to scope out your requirements and put plans in place to expand overseas.

 

Franchising

By licensing your business format to others looking for a business opportunity, you can earn a share of all revenues earned. Many well-known brands, including McDonald’s, Drain Doctor, Tumble Tots and Stagecoach Performing Arts, are franchises. All kinds of business models, from care homes to tax accountants, can be franchised.

 

Mergers and acquisitions

Buying other companies, or joining them, can help you move into new markets or grow your market share. This can be a fast track to:

  • Removing competitors from the market
  • Buying in experienced staff
  • Acquiring the latest technology
  • Getting access to a better performing business.

Once you’ve chosen a strategy, draw up a budget to show projected profitability in the short, medium and long term. Don’t forget to take account of the impact and cost of integration and the benefits from potential synergies between organisations. This should help you firm up your plans and help convince any financial backers of the strategy’s merits.

3. The implications of growth

Though you grow a business to improve revenues and profits, you’ll probably increase your costs too. This is likely to affect your cash flow overall. Here are some additional costs you may need to be prepared for:

  • More staff (both from a salary and tax perspective)
  • Employing or hiring specialists
  • New buildings, equipment, machinery and systems
  • International trade
  • Moving premises
  • Increasing the size of your management team
  • Changing your management structure
  • Increasing the amount of inventory you hold
  • Introducing new business and financial controls
  • Sourcing new suppliers and customers
  • Professional assistance
  • Integrating a new acquisition
  • Increasing your marketing and advertising spend
  • Upgrading cyber security.

4. Funding growth

You’ll almost certainly need funds to finance your expansion plans. Work out if the business has any existing funds that could be released, then assess how much you’ll need to borrow or get from investors.

See more on funding business growth.

5. Sustainable growth

Make sure you keep a close eye on your figures as you start to grow and that your profit is growing alongside your turnover. Don’t focus on the growth figure at the expense of understanding your growing liabilities, for example, how quickly you are receiving payment, increasing staff or advertising costs.

Refer to your growth plan and track how well you are performing against your original goals and revise your plan as necessary.

6. Bring your team along with you

It’s important to keep your company culture strong at times of growth. Make sure new recruits fully understand company values and what is expected of them.

Long-term staff might take time to adapt to change, so make sure you keep them engaged and motivated. Expansion can provide opportunities for your team to upskill, take on new responsibilities and to be promoted. This can improve staff retention and show your workforce that there is a long-term career path for them in your organisation, creating success for everyone.

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.

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International Trade Portal

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