Growth is not a simple catchword, nor is it just a mantra for businesses. While growth is fundamental to the success and longevity of every business enterprise, it’s important to make sure your company is equipped to handle the significant changes it can bring.
We all want new business, but can your company take on the costs and workload required?
Why is Business Growth Important?
Business growth, properly approached and sustained, can allow a business to expand its products or services, stimulate innovation, increase sales, stave off competition, increase market share, attract more customers, attract more staff, and take advantage of new opportunities.
Business growth can also facilitate lower costs due to economies of scale, achieve greater buying power, and help a business survive market fluctuations. However, successful business growth must be strategic, not happenstance.
Every business owner needs to define their idea of success and determine their motivation to grow, then create a clear plan of action for handling new changes. Consider that this may mean hiring more employees, taking on more facility management duties, and potentially more business challenges.
It is also important to consider if significant growth will detrimentally change relationships with employees, stakeholders, or current customers.
How Do You Know if Your Business Can Handle Significant Growth?
To determine if your enterprise can handle significant business growth, ask these questions:
Do you have a regular and steadily growing base of customers indicating that there is solid demand for your products or services? And are those products or services satisfactory?
Do your customers want your business to grow? If they are asking for more, then growth may satisfy more customers.
Is your industry growing? Industry growth indicates increasing demand.
Is your business profitable? If profits are regular and increasing, it may be time to grow.
Do you have more business than your current facilities or employees can serve as efficiently as you want?
Determining business growth opportunities requires a careful assessment of where the business stands. Does the business have the will and the capacity to grow?
How To Manage Significant Business Growth
It is important to understand that while business growth is generally good, unwise or unprepared growth can crush a company. Use these tips to engineer wise and sustainable growth:
Define your growth objectives and capabilities
These include having or being able to secure sufficient capital to finance growth, having a good cash flow record, and having a management team with the competencies to grow.
Conduct a company growth diagnosis
This diagnosis will shed light on how well the company is managed including the aspects of sales, receivables, operating expenses, and assets. Make sure that your growth is not simply seasonal or one-time growth.
Develop a growth strategy
This will include understanding the company’s risks and opportunities. It will also include a review of the industry, the economy, competitors, distribution channels, and customer demographics.
Prepare for any financial impacts and changes
Carefully forecast cash requirements and analyze receivables and payables. Examine operating expenses and determine ways to control costs as significant business growth is achieved. Similarly, examine your debts to determine how debts will be controlled and lenders paid off so you can continue to get the financing that you need.
Get expert tax, accounting, and financial assistance
The smartest thing you can do when expecting financial changes in your business is to partner with a financial advisor you trust to get the financing, tax, and accounting assistance that will support this new growth. Doerhoff & Associates, CPA, has one goal in mind: to provide comprehensive business accounting services designed specifically for your success.
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting, financial assistance, and tax preparation that you can count on.