By Stephen Pegge, Head Of External Affairs, Lloyds TSB Commercial
If the pace of change is too slow, your business may stagnate; if it’s too fast, you run the risk of making it vulnerable in a competitive marketplace.
To ensure that your business is ready for expansion, you need to plan your growth strategy carefully.
Doing the market research
For your business to flourish, there must be sufficient demand for the products or services you offer.
Before committing to expansion, research the marketplace thoroughly and, in particular, any emerging trends and technologies that may indicate a decline in your sector.
You should also talk to your customers. Ask them:
- What do they want and how are their needs changing?
- Why do they come to you and not the competition?
- How do they think you could improve the products or services your offer?
This dynamic document outlines your vision for the future of your business, looking at where you are now, where you want to be by a given date and how you intend to get there.
A good business plan will:
- Force you to make an objective appraisal of where your business is going.
- Give you a sense of direction and a clear action plan.
- Prove to financial backers that you have a clear understanding of your business and its position in the market.
- Set targets and allow you to measure your success.
- Demonstrate your commitment to future development.
Putting your plan into action
Your business premises
As your business becomes more successful, it’s likely that you’ll need more staff, facilities and equipment to cope with demand. You can increase the size of business premises in one of three ways:
1. Extend your existing premises.
2. Keep the existing premises and obtain an additional site.
3. Relocate your business to a completely new building.
In each case, you will need to consider the impact on staff, customers and suppliers.
You should also be careful not to overstretch your finances. Your premises need to allow for future growth, but you don’t want to pay for space you won’t use.
Property may be purchased freehold and leasehold. If there is an option you will have to decide which is best for you.
Leasing may offer flexibility and the ability to update more frequently, but this could increase the overall cost.
If you plan to expand into new premises, make sure you choose a location that allows you to optimise as many aspects of your business as possible.
Ensure that the premises have the necessary planning consents, and consider the following:
- How accessible does your property need to be for customers and/or suppliers?
- Do you need to be near good transport links, including airports if you trade internationally?
- How convenient will it be for you, your existing staff and any new staff you wish to take on?
- If multiple sites are unavoidable, do they need to be near each other?
- How much competition will you face in your chosen location?
- Would your business benefit from a position near other respected brands?
You can increase your output by improving overall efficiency and productivity, but real growth usually requires investment in the physical assets you need to produce your goods or services.
To ensure you don’t underestimate or overestimate your requirements:
- Review your projected needs in the short, medium and long-term.
- Plan your investment to keep pace with increasing volume.
If demand for your product or services is seasonal or irregular, track the peaks and troughs over a period of time to identify any patterns. This will allow you to take advantage of opportunities when you are under capacity, or to take on extra resource for busy periods.
Your relationship with your workforce
While your business is small, you can retain complete control and a hands-on style of management. As numbers grow, your relationship with your staff will change.
There are three key areas you should focus on:
1.Your role: as the business expands, you will have to relinquish some of your existing responsibilities and decide how you want to be perceived in the new structure.
2.Recruitment: taking on new employees has to be managed carefully. Your existing workforce may see newcomers as a threat.
3.Internal communications: during periods of change in particular, your staff will want to feel supported and listened to.
To maintain growth you will need to gain more business from existing clients and/or attract new customers.
A targeted marketing plan, based on market research and knowledge of your existing customers, will help raise your profile and generate income.
To determine your strategy, ask the following questions:
- Are your existing customers growing with you or do they represent a decreasing proportion of your business?
- Do you want a few high-paying customers or a large amount of trade from customers who spend less?
- Do you want to offer incentives for repeat business or to recruit new customers?
In the early stages of expansion, you may require additional expertise in your business. Rather than take on full-time staff to cater for this requirement, it may make practical and financial sense to outsource.
Outsourcing eases pressures internally and allows you and your staff to focus on the primary objectives. Aspects of business which often lend themselves well to third-party management include:
- Accounts, legal and finance.
- Marketing (including Internet services).
- Technical support.
Outsourcing inevitably involves losing a degree of control, so establish procedures that allow you to monitor performance as closely as possible:
- Appoint a key contact between outsourced functions and the business.
- Keep an open line of communication.
- Obtain written agreements and quotes whenever possible
On a regular basis, you should also
- Set deadlines.
- Review quality and standards.
- Re-evaluate your needs and reassess arrangements
While all reasonable care has been taken to ensure that the information in this business guide is accurate, no liability is accepted by Lloyds TSB for any loss or damage caused to any person relying on any statement or omission in this business guide. This business guide is provided for information only and should not be relied on as offering advice for any set of circumstances and specific advice should always be sought in each instance.
Lloyds TSB Commercial is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc and serves customers with an annual turnover of up to £15M.
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