Planning Ahead for Business Growth

It may seem funny to be thinking about business growth during an economic downturn, but many businesses will continue to thrive during this period. For others, there is the hope that economic recovery will take off over the next couple of years. It is therefore important to plan ahead so that you can take advantage of growth opportunities

Types of Growth

There are five main ways a business can grow no matter how much Marketing Consultant disguise this with important sounding jargon. You can bring in more customers, you can sell more products or services to your existing customers, you can expand into new markets either geographically or sectorially and lastly, you can buy more business through acquiring another company. The first four options are known as organic growth and the last is growth by acquisition.

Planning for Capacity Growth

Experts advise that you should plan for expansion when your business is at 60% of its capacity. Capacity is the maximum amount of business that you can deal with. If your services are time based, such as cleaners, trades people, or consultants, you can only increase your capacity in two ways if you plan to offer the same services. Either you can work more hours, or you can hire people to work for you and charge for their time.

You will need to work out if this is viable. Alternatively, you can explore offering enhanced services at higher rates. If you sell a product, you will have to analyse the demand forecasts and plan to add extra production facilities, new products and extra staff. Choosing the right time to expand is made easier if you understand the market, have solid forecasts and good advisors.

New Staff

It is often suggested that new staff take around six months to become properly bedded into to a new job or a new role. This means it makes sense to put staff in place before they are needed, so they can get up to speed, but not so far in advance that they represent a drain on your resources.

Taking on staff involves a lot of time, effort and red tape, particularly if you are a small business or you are taking on your first employee. You should talk to your accountants, bank and business advisers before hiring. A cheaper, less time consuming and more flexible option may be to look at using freelancers or looking for partner companies to work with, until you are sure you are ready to take on permanent staff.

Expanding into New Markets

Another way of expanding is to enter new markets. These can be either geographical markets – such as setting up a second shop in another area of your town, or finding overseas customers. Again, you should discuss this with your advisors.

Developing New Products

As a product based business, you should be investing some of your resources in bringing a steady flow of new products and upgrades to your customers. New Product Development (NPD) can be a risky business, but is made more reliable by discussing your products with your customers and discovering what they would like, and more importantly perhaps, what they would be willing to pay for.

Growth by Acquisition

An economic downturn can be the ideal opportunity to acquire business through acquisition. Companies and assets are often available at a discounted rate and brands may be bought from receivership for a bargain price. Acquisition requires considerable funding and should not be done without due care and attention. Buying a failing business can be a mistake unless you clearly understand where the business is failing, what the customer base wants and how you can get value from your purchase.