By Beth Holmes
One of the biggest challenges facing any small business is how and when to expand. Beth Holmes looks at the factors you need to consider if you want to grow your business.
Strengths and weaknesses
“One of the best ways for a business to see if it’s the right time to expand is to do a SWOT analysis, taking an objective view of assessing the business, its resources and its environment,” says Sara Lee from the Federation of Small Businesses.
SWOT analyses involve looking at your strengths, weaknesses, opportunities and threats. Says Lee: “They’re a good way to understand your business and the market in which it operates. They will also show potential investors that all the options and factors that can influence the success of a business have been thought through.”
The importance of marketing
Regularly taking a step back and looking at the market in which you operate should help you to spot any new opportunities, argues Lee. However, research from the Chartered Institute of Marketing and Deloitte found that 49 per cent of companies are not using customer or marketing measures to inform board-level decision making, which, when you’re thinking of expanding, can be foolhardy.
“Marketing must be an integral part of business strategy to maintain growth,” says Mark Blayney Stuart, head of research at the Chartered Institute of Marketing. “It can lead this growth through intelligent use of customer and market analysis to inform strategic development. Everyone within an organisation must therefore be marketers, to ensure that growth becomes a clearly focused and fully integrated philosophy across the business.
“Marketing should be thought of as a two-way process, one which allows you to talk to your customers rather than at them,” he continues. “By knowing your customers better, you can be sure that you can pre-empt their needs and contribute to the bottom line".
Know your people
Making sure you have the right employees is another essential part of any growth plan. Dan Holmes, commercial director of events company Upper Street Events, which has 30 employees, explains the company’s growth strategy, which has seen its show portfolio grow from six events to 11 in three years.
“Growth is more than just hitting a set of numbers, it’s about making significant changes to the company in terms of facilities, employees, product and strategy,” he says.
“Over the past couple of years, the decision to embark on a growth strategy has been an exciting challenge for us, but one that we’ve committed to wholeheartedly because we believe growth is absolutely crucial to the long-term success of the company. Of course there are risks, but we’ve got an excellent team and with the proper preparation, due diligence and plain old hard work, every move we’ve made to expand and increase our show portfolio has been done with strong foundations of a robust business case and watertight funding sources.”
Holmes’ advice to any firm wanting to grow is to have the right people in the right places and to create an environment where everyone is willing to work through the growing pains.
The money question
Of course growth costs money, and so getting the right funding from the most appropriate source will be critical for the success of your expansion. While the banks may be tentatively lending again, alternative funding sources include institutional investors or business angels, or a government grant or loan.
It’s best to take specialist advice here, so talk to your accountant about the various options, or use these resources for more information:
- British Business Angels Association: www.bbaa.org.uk
- British Chambers of Commerce: www.britishchambers.org.uk
- British Private Equity and Venture Capital Association: www.bvca.co.uk
- National Enterprise Network: www.nfea.com
- UK Angel Investment Network: www.angelinvestmentnetwork.co.uk
While digital platforms shouldn’t be thought of as a silver bullet, they do provide a unique opportunity to interact with your customers. They also allow you to spot new opportunities in the market as they are created by your customers, and are a chance to get ahead of your competitors.
“Your customers need to be engaged in you and your product to achieve a solid return on investment,” says Blayney Stuart. “New platforms such as Twitter and Facebook give you these opportunities to both educate and engage, to further new business leads and, ultimately, business growth.”
Taken from Solutions SPRING 2011 Article written by Business and finance writer Beth Holmes writes articles for industry titles including Financial Director, People Management and Tax Adviser
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