EMMA MITCHELL: How to grow your start-up
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As a business you have to continuously evaluate the products and services you offer to ensure that you meet demand and if you can be ahead of the trend you can benefit from fantastic growth.
In a recent study 33% of businesses want to expand their customer reach, 29% want to grow their products and services whilst 30% are focusing on reducing costs due to the cost of living crisis.
Business leaders are investing in their online presence particularly around websites and apps and 24% are investing in digital marketing to reach their goals.
Where does business leaders investment come from?
Established businesses could be relying on savings, accumulated from profits, others maybe looking at finance or an overdraft to help grow their business. But for start-ups it can be tricky trying to fund your growth as cashflow tends to be tight and many owners will use their own savings or ask family and friends for a bit of extra financial support. But for some you would have exhausted all these avenues and therefore you might be struggling to understand how to grow. Help is out there and it is best to speak with a business consultant and commercial financial consultant who can support your business with the right opportunities for growth.
Barriers to growth
Some business leaders will be reluctant to invest in growing their business because of the state of the economy; inflation is high and energy bills are still difficult to bare. Cashflow could be a problem and accessing finance maybe harder during difficult economic trading conditions. However by delaying growth and missing out on opportunities for growth could put your business at a higher risk.
Business growth is important to new businesses but also established businesses, you need to focus on growth to continually improve market reach and profitability. Business growth comes in different forms:
- Organic – cheapest method but can take time
- Internal – efficient processes to meet increasing revenues/cost cutting measures
- Strategic – planned strategy for growth (product development/marketing strategy)
- Mergers & Acquisitions – return on investment can outweigh the financial risk.
If you don’t grow your business it can stagnate, you could lose market share and competitors could set up in competition as they are filling a gap in the market because you have lacked innovation. So growing is important and it doesn’t mean bigger! It could be growing your product range or deciding to niche or broaden your market share or even pivot in tough times. Growing is about not standing still and not taking your eye off the opportunities to keep those loyal customers returning year on year.
But it’s not all about growth
Growing a business is different to scaling a business. Growing a business is where your revenues increase and your costs rise too. Whereas scaling a business is achieved through “Economies of Scale”. As your revenues increase, your costs don’t increase by the same margins meaning you have more profit. So if you want to have a bigger better business that gives you more profit for less effort you might want to consider scaling your business.
For example, most businesses grow like this….The more you sell the more resources you need – which cost you money. Or you just stay the same size and not grow once you have reached capacity. If you’re selling a product your unit costs may come down a bit as you increase quantities but to scale the business, you need to increase revenues without more resources and for example the unit costs need to decrease. This could be achieved by producing more units using the same resources (increased productivity) or by negotiating a lower unit cost as quantities sold increases if using an external producer. It is similar in a service based business, you need to increase sales without the need for more human resources, there are of course some exceptions. If you provide a personal service it can be hard to see how it can scale, as you can’t wash two heads of hair at the same time for example, but economies of scale are achieved through bigger salons and more salons in other locations all under the same brand.
Key takeaways
When growing your business think “scale up”. Have a strategy to achieve this, ensure you have the processes in place to scale, research growth opportunities, utilise a marketing strategy that works for your business model, learn how to lead and communicate with your team, measure and adapt as you need. Finally ensure what you’re creating is sustainable.
If you need help growing and transforming your business, or you need start-up advice, call Emma Mitchell at Eris Business Services on 07764 192503 or email: emma@erisbusiness.co.uk or visit our website: www.erisbusiness.co.uk
