Eight tips for sustainable business growth
By Gayle Bryant
Growth is generally perceived as a sign of business success, but growing too quickly can be as difficult for your business as growing too slowly. Here are eight tips to ensure your business grows sustainably.
The right structure
Putting the best structure for your business in place upfront will make life easier down the track. As you grow you may need to review the structure so take time to think about your future needs, particularly around capital gains tax, payroll, and fringe benefits tax, as well as the possibility of taking on new partners.
Know your customers
Take the time to really get to know not only your customers but also what your competitive advantage is. This knowledge will feed into more effective marketing and staff training.
Understand your cash flow
An overall understanding of your financials is crucial and staying on top of your cash flow is key. By monitoring your financial ratios you can identify where any trouble spots are occurring and take action. Remember if you don't have any cash coming in, how can you grow?
Establish good relationships with financiers
These days financial institutions have dedicated specialists that look after the needs of their small business customers. Make sure you maintain good relations with your lender and keep them informed of all aspects of your business. This will help improve your chances of gaining access to finance during any rocky patches or when you need capital to invest.
A common mistake among small businesses is confusing cash with profits. Money coming in doesn't mean you are making money. Get to know the point at which you are breaking even, as you can then use this knowledge to make strategic decisions around your sales.
Undertake research and development
Even if you have a successful product, you can't rest on your laurels. Research and development is crucial if you want to stay competitive. This process can be as simple as surveying your customers about how you can improve your offering.
Hire the right people
Your staff are the face of your business and you need to invest in them to ensure they remain happy and productive. Even if you are a one-person band, you can't be all things to all people, so make sure anyone you outsource your work to - such as an accountant - is in step with your vision and goals.
Know where you are heading
Having a long-term plan, whether it's a three or five-year one can keep you from getting too bogged down in the day-to-day minutiae. In other words, take time to work on the business rather than in the business, as this will give you a better perspective of where you are heading.
While growth is something all businesses aspire to, it is crucial to have a realistic and manageable plan to work towards to ensure your growth is actually sustainable. Otherwise you may end up with growth that will have a negative impact on your business and reputation.