Ask virtually any small business owner what they want for their company, and the answer is likely to be “more customers, more money, more business.” In other words, they want their business to grow.
But how do you get your small business to grow?
Like many small business owners, in the beginning of my own business, I didn’t really plan for growth. Instead, I responded to opportunities as they came to me. In fact, I first went in to business by literally bumping into an opportunity. One day, while walking my dog, I met a man who needed a business plan. He was my first client. Twenty-five years later, I’m still dealing with business planning.
But there are big problems with growing your small business opportunistically. Most importantly, you can’t control it or count on it. And opportunities, especially big opportunities, often mean demanding clients that can distract you from building your core business.
Over the years, I’ve come up with a few rules to keep in mind when hoping for and planning small business growth:
- Know what business you’re in. You may think you know what your business does, but in today’s rapidly-changing world, with more competitors, it may be hard to figure out exactly what your strategic position is and how your customers perceive you. Take my small business. We called ourselves a book publishing company. But the world of book publishing has been radically disrupted. We needed to figure out what our customers really wanted from us and understand our core competencies so we could change to survive in this new competitive environment. What are your core competencies?
- Take care of your bread-and-butter business first. What business activities actually bring in the money to pay the bills? Never jeopardize these activities, even if they’re not exciting or “sexy.” It’s easy to get bored with your own business—don’t allow yourself to be. After all, your employees need a paycheck, and your dog has to eat. Look at your financials to see where your sales come from and who your biggest customers are. Taking care of them is your first, though not your only, priority.
- Don’t bet all your money on one horse. Many businesses—including my own at one point—have one or two customers or distribution channels that bring in the bulk of revenue. Be careful. Being dependent on one or two revenue streams is perilous. It certainly made me nervous at the time, and I knew I had to add new revenue streams to reduce risk, which I did. And that saved my business.
- Be clear about your target market. If you don’t know exactly who your customers are, you won’t know what they want and how best to serve them. The biggest problem of most small businesses is they try to serve too large a market. Find a niche and own it. When you try to reach too many customers—or types of customers—you spread your resources too thin, and your message gets fuzzy.
- Identify exit scenarios and what’s necessary to make those possible. Someday, you’ll want to leave your business—sell it, close it, pass it to your family members. Outline a few realistic exit possibilities and the steps necessary to make those happen. For instance, if you’d like to sell your business, what would make your company attractive to a buyer?
- Build one business at a time. Most entrepreneurs have many great ideas and see opportunities to grow in many different directions. But if you try to act on all those ideas—seize those opportunities—at once, you’re less likely to be successful at any one of them. A key rule is to concentrate on only one new direction—product line, target market, distribution channel—at a time. Get that done right, and only then expand.
- Choose a strategy you can afford. Growing a business takes money: for marketing activities, new staff, inventory. How will you fund that growth? Through your own revenues? That means growth will be slower. By taking out loans? You’ll have more debt and obligations. By finding an investor? That takes time and you have to give up part of your company’s ownership. Figure out what kind of financing you can live with, and choose your growth strategy accordingly.
Copyright, Rhonda Abrams, 2018
This article originally ran in USA Today on January 10, 2018