When is the right time to grow your business? It’s a risky but exciting proposition— if you scale too early, you risk over-stretching resource and diverting from tried and tested revenue streams. At the other extreme, you do nothing and see your competitors achieve what should have been me!
So, what signs should you look for, before upping the ante?
How do you step up to the precipice with confidence that you will fly?
Here are some of the primary considerations that came from our team as we prepare for leap ……
Coping with Leads
If you know your lead conversion ratio, and you can cope comfortably with the leads which your marketing activities are generating; enjoying steady growth and increasing the number of referrals from your client network – then don’t.
If you are ahead of your business plan for the year – CHECK. With more leads than you can cope with – CHECK. Without a notable increase in marketing spend – CHECK. If the lead conversion rate is getting closer CHECK.
Meanwhile your existing clients are happy; your services to new clients are good but getting stretched; there are no short-term market forces at play (the dreaded BREXIT or a Regulatory change that forces people in your direction for a moment in time)
Your competitors seem healthy. Your proposition is good – Go for it!
Your Business Has Been Profitable for a While
Another great indicator that your company needs to look at expansion is sustained profitability – generally two or three years. If you have demonstrated this kind of success, it means that a lot of things about the business model are right and you are probably in a strong position to build on that success. If you have something that’s already working, it’s a good bet that it will also work at a larger scale, too (as long as you are cautious about not expanding too much too quickly).
Get advice from your local enterprise company, your bank/investor, and if it looks good, and you can honestly cope with delegating your authority to others – you’re ready -Go for it!
You Lead an Incredible Team
If you are currently being successful with a unique blend of skills which gives you a competitive edge, you are in a good place. If you can identify a development plan to fill gaps with new blood and grow your existing team – that’s better. Don’t be precious about your stake-holding in the business – you may need to make sacrifices to maintain loyalty with share options.
You know how many plates you and your team can spin to meet current demands – give them more hands not more plates! Expansion puts a lot of stress on your team and you will need to delegate more and more responsibility. If you trust your team to take care of it, then it becomes a lot easier to be confident that growth is a good idea, and that you have just the right team to make it a success. If you can’t let go, stick with what you are happy with. If you can let go, just a bit at a time, and trust the team, then Go for it.
Do you have the People and the Structure?
OK – so you can cope with a reduced level of control, and delegate responsibility, but have you got the structure and the right people to fulfil the roles and responsibilities within. Are you the best leader or should you focus on an operational area where you excel, and leave the running of the business to someone who will be better at it? Who will look after Finance, Sales & Marketing, Technical, Operations? Sometimes you need to double up. And don’t forget Human Resource Management – part-time or full-time – there are important obligations and regulatory requirements to adhere to, and do you have time to manage disputes, moans and groans.
The most important consideration is that when delegating responsibility, you delegate authority, and letting go is never easy
Do we have money to spend?
Let’s be honest, one of the most difficult things about expanding your business is cost. You need to get a new location, expand your team, get more office space, purchase additional technology and more. And you need to have access to cash to do it. If the coffers are over-flowing – well done. If not, but you are sufficiently profitable for growth, then reduce your salary and dividends – Your Business wants YOU. Otherwise, you have to convince the bank that they should have faith in you, that you appear not to have in yourself. Or you give away a chunk of the business, which might be right if your reduction in control is met by skills and resource that complement the business.
We discussed many other considerations before deciding to scale our business, and on reflection, these inspired the most thought, fear, excitement and debate. So, if you put them into your growth deliberations – we hope you find the answers that work for you.
Read our case study to find out how NetSuite can support your scale-up.