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How to Grow Your Business for Continued Success

9th November 2017

Getting past the start-up phase of a new business venture is a fantastic achievement, but if you want to ensure your business's long-term survival and the future economic well-being of both you and your staff, you'll need to employ some form of growth strategy.

Some businesses, such as small corner shops, off-licences or dry-cleaning outlets, continue in the same single location for decades, selling the same products and services, without any growth at all. If the aforementioned applies to your business, then simply providing a high level of customer service and keeping your prices competitive should be enough to keep the enterprise going.

However, for many business owners, failing to keep up with new developments in markets, such as online shopping, means their enterprise will eventually run out of steam and sales and profits will begin to fall to the point that the business is no longer viable.

External expansion

One way to grow your business is to open new outlets, either by starting from scratch or by taking over other businesses operating in the same field and absorbing their premises, staff and services to add to your own.

A single retail outlet will have a limited revenue stream and be far less stable than a larger business providing the same products but with multiple locations and dozens of staff. If you want to keep your business stable even as the market changes, you'll need to expand your operation.

If you choose to grow your business in this way, not only will you be able to increase the amount you pay yourself, but you'll also have far more freedom to enjoy the extra income. A larger business means having to delegate work to others as you'll no longer be able to do everything yourself. So long as you find a team of talented and reliable people, you'll be able to step away from the day-to-day running of the enterprise whenever you need or want.

Another option for rapid, low-cost growth is the franchise model in which you receive capital investment from others who are then able to make use of your brand. Many of the most successful companies in the UK have made use of the franchise model, and it can be extremely profitable and satisfying for all those concerned.

However, not all business types will suit this model, so if you have low gross margins, sell predominantly to repeat customers who are loyal to you personally rather than the company as a whole: if your business depends on a high level of skill that could only be acquired after a considerable amount of training, it might be best to look at other avenues.

Internal expansion

You can also grow your business from the inside, adding new staff, moving into a larger premises or upgrading your equipment to be able to offer enhanced services to your customers. In an ideal world, you would want to wait until your profits were high enough for you to be able to meet the cost of such an expansion yourself, but this is not always practical. Especially in fast-changing markets, keeping up with the latest trends and equipment is essential in order to maintain market share, let alone grow.

You should always be looking for ways of increasing your sales, not just by reaching out to new customers but also increasing the amount you sell to your existing customers. You should also use your most loyal customers to improve your products and services. Try out changes on a limited basis and gauge the reaction before launching on a grander scale.

If you’re not already selling online, that is a market that might be worth exploring. You can also hire the services of a business mentor to get more idea on how to expand, based on successful strategies that have worked with similar enterprises.

If you need to move into new, larger premise or to upgrade your IT systems, it might be worth considering taking out a loan from a commercial finance company as this will provide the cash injection you need without the red tape and restrictions that tend to be part and parcel of a bank loan.

Expand the market

Another strategy to grow your business is to move into a new area that complements an existing service you offer. Ideally, the two services should be related to one another so that you are not extending into an area in which you have no expertise. A good example would be that of a clothing manufacturer opening its own retail outlet in order to sell directly to the public.

Each business would then drive sales for the other: as the number of clothes being sold or retail outlets increases, so the manufacturing side has to produce more.

Although you might have very clear ideas about what it is you want to produce, you need to ensure that there is a pre-existing demand. Your job is to serve the customer, not the other way round.

Always watch the cash flow

Staying fully on top of the management of cash flow is essential to both the survival of your business and its growth. You should also keep your focus on your business margins, not just your turnover. As your sales figures start to grow, your turnover will inevitably start to increase, as will your operating costs. If your costs are increasing more quickly than your turnover, your business will eventually be heading for a fall.

One common mistake is to take on a lot of new salespeople to push your business into new markets without working out in advance exactly where the money to pay them will be coming from. If the sales staff are being paid on commission, it must be from profits and not turnover. Failing to do this will prevent your company from being able to break even.

As your sales and turnover grow, you also need to be aware of the threshold at which you will need to register for VAT. At this point, it might also be an idea to speak to an account to confirm that the legal business structure you have in place is the most suitable going forward. This is particularly true if you started out as a sole trader and are now expanding into a larger concern.

Posted by Pirate FM at 1:48pm

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