Keep in mind that growth does not just happen; you have to plan for it and take action to make it happen. Many small businesses that were thriving a decade or two ago have disappeared because the owners did not plan for growth.
As the business environment changes with time, you need to stay ahead of the changing trends. Without growth you will be overtaken by competitors who are always on the prowl looking for new opportunities. A small company will not have enough resources to defend itself when new players come on to the scene.
You need to keep on moving in order to keep up in this increasingly global economy. Growth is an increase in the value of a company. The following contribute to the value of a business:
- customer franchise
- capable managers
- operational efficiencies
- competitive edge
One of the most important assets of a company is its customer base. Without customers to buy your goods and services you are not in business. Making something that pleases you and not necessarily anyone else is really a hobby.
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A business usually starts with a few customers, who gradually increase with time. However, as an asset, a customer base is hardly fixed as an aggressive or innovative competitor can rapidly sway customers away from your company’s products.
Failure to acquire new customers will not leave your customer base at the same level; it will actually erode it as competition is always lying in wait to snatch your existing customers.
You really need to keep on acquiring new customers in order to maintain the value of your business. Growing the number of your customers requires a great deal of effort.
When you started in business you had little or no experience of running your own real company. You learned and gained knowledge and experience with time, improving your methods and processes until you became effective and efficient in managing the business.
Such experience adds value to a company. To grow, companies must develop and acquire capable and experienced managers in the important aspects of business: people management, marketing, production, finance and so on.
Operational efficiencies improve as capable managers use their knowledge and experience to enhance the company’s systems and processes. New companies make mistakes because of the lack of experience.
Their systems will be inefficient as they navigate through the learning curve. Operational and systematic efficiences can hardly be taught at college nor can they be learned from books. They are acquired on the ground; on the factory floor or in the office where the work gets done.
It’s like the strength of a car tyre; it’s proven on the road, where the rubber meets the tarmac.Efficient systems and processes and a market oriented culture contribute to give a company an advantage over its competitors. Continuous improvement is required in all these areas if a company wants to grow. Strategic planning will help point out the areas that need improvement and map how this will be achieved.
Business growth is basically measured in financial terms. Other measures include the number of customers, volumes and market share. Financial measures are good performance measures because they are standardised and objective.
One can easily compare the performance of one business against another by analysing the financial results. In setting your growth targets, financial benchmarks are good measures because they enable comparison with previous periods.
Financial goals are therefore an important part of the strategic planning process. Depending on your business values and vision, other measures may also be important, such as quality, customer satisfaction, efficiency and service turnaround.
As you get used to the strategic planning process, you will find some measures more relevant than others and so you will adopt those that are useful for your purpose.
The series of business skills training workshops under the Zimbabwe Agricultural Competitiveness Program is continuing throughout the month of September.
It is aimed at those business owners who are in the agro-industry value chain who need to improve their competitiveness in business management. You can email me for more details.
Phillip Chichoni is a business planning and financial management consultant who works with entrepreneurs and SMEs. He may contacted on email [email protected].
WAYS IN WHICH A BUSINESS CAN GROW
These are just some of the ways:
- Get existing customers to buy more of the same product.
- Get new customers to buy existing products.
- Extend your products and services range.
- Develop multiple products and services that you can cross-sell to same customers.
- Sell more higher margin products.
- Franchise your business, i.e. get others to make and sell your products in return for a fee.
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