When is the right time to grow your business?
When you're a start-up or an SME, the answer to the issue “to grow or not to grow” is simple: you need to grow to achieve scale and stop the cash burn. However, whenever you “choose” to grow, or how fast you do it, is a much trickier question.
Growing pains are as common in business as a child in the stages of development – an indication your business or organisation may not have properly developed the internal systems required to take the next step. To minimise potential impacts, you need to anticipate the key requirements at various points and also have a considered, long-term business strategy to keep up with consumer demand for your services or products. Here's the best way to fight growing pains:
1. Define success
Before you consider growth, you need to define what success looks like from an expansion viewpoint. Success for a start-up or SME varies. For the former, cashflow is paramount and for the latter, strategic planning and coordination for long-term viability is most important. Focus on what you define as successful as you grow and share this together with your employees to ensure you are all continuing to move forward together, at the same pace.
2. Plan to grow
This may be the most important step to minimise the impact of growing pains – to develop a plan and strategy for when and how fast you grow. Planning is dedicating time for you to the resources and schedules for that operation of your business. Strategising is evaluating how you can improve your business performance, customer experience or profit model. It's crucial you are making time for both.
For us, the best time for our business to develop is when we can balance new customer demand with this internal systems and processes. Growing faster, for us at least, generally costs more per customer once we need to engage more expensive channels within our business model.
This will differ from b2b, however, as you move from one stage of your plan to the next, it's important to move back and ensure your internal systems and procedures can cope with the demand. There will be some give and take as you grow, but it's better to be proactive, not reactive in this space.
3. Ensure your business model is scalable
As a start-up or SME, you have to consider how you can continue to provide the same customer experience or product that people expect from your brand while you grow. For us, this means ensuring our business model is scalable. Otherwise, you are able to risk “winning” customers only to disappoint them since you may not meet their expectations.
A scalable business is one that considers how the business model will affect the bottom line whenever you expand operations. Businesses with high scalability grow with lower capital requirements and aren't limited by the same sales-cost relationship as a linear model. Initial costs might be higher, but when you think long-term, it's much easier to deliver greater numbers of exactly the same product and experience to your customers.
While there is no secret sauce to how to grow your operations, the “right” time to grow is a trade-off on the cost for your business to grow and the ability to continue to deliver the same customer experience that enhances your brand. Sooner or later, most start-ups or SMEs will reach a crossroad and it's up to you to decide if you're ready to take your business to the next level.
