Small businesses are in a good mood and confident about growth. That’s according to the 2015 U.S. Bank Annual Small Business Survey, which found that small business owners are more confident about the future of their businesses now than at any time in the past six years. According to the survey:
“Optimism is on the rise, businesses are healthier, and they may be on the verge of taking action to expand; however, few are actually seeking credit to do it.”
25% of business owners who said they plan to add staff in 2016.
Three out of four say their business is financially strong.
Related: How to hire your first employee
It’s a refreshing outlook given the struggles that small businesses have experienced as a result of the recent recession. But growth isn’t easy and is frequently stymied by the unexpected, whether it’s cash flow, manufacturing problems, poor hiring decisions, and so on.
If your business is ready to grow, check out these tips for dealing with some of the factors that frequently thwart small business growth and putting them to your advantage.
Trust Your Gut, But Pay Attention to Business Indicators
Your gut instinct is a great catalyst for growth, but don’t rely on it alone or you may find yourself going down the wrong path. Instead, look to your business reports to assess growth opportunities.
Indicators to consider include:
- Your sales pipeline
- Sales conversion ratios
- Product profitability
- Market trends
Could you repeat success in one market elsewhere? What about expanding your offerings to include services such as installation, support, and so on. Is your product development driving new opportunities in complementary areas? This is where conducting a SWOT analysis can help you weigh up the pros and cons.
“SWOT” Your Competition
Mapping out your competition through “SWOT” (Strengths, Weaknesses, Opportunities and Threats) is an exercise that will give you the insights you need to capitalize on growth opportunities and help build the case for any third-party financing you may need. Sure, your competition can outwit your growth plans, but it can also be a driver for growth.
That’s because it requires a deep understanding of the competition to win in the areas that matter most. Look again to your SWOT analysis.
If you’re not sure where the opportunities for growth are in light of your competitive landscape, this exercise will reveal them. It will also tell you what threats the competition might pose, as well as where their weaknesses lie.
Your analysis will also stand you in good stead when it comes to defining your market positioning and marketing messages.
Don’t Ignore “The Help”
Employees are the lifeblood of growth. That’s why you see so many job descriptions seeking “someone to take our company to the next level…” But don’t wait until your growth plans are approved before you start thinking about hiring the support you need to get to the next level.
Make a habit of always being on the lookout for your next star employee or team member. And this doesn’t necessarily mean hiring folks now. Help comes in many forms.
Independent contractors: This is an economical place to start – they contribute as needed and get to know the ropes without the expense and management oversight that employees need.
They can also step in quickly when you need them, without the overhead of benefits, salary and recruitment costs.
Related: When is it time to hire a contractor?
Mentors: Many business owners overlook the opportunity here. Don’t go it alone, get help from someone who has stood in your shoes. Take advantage of other business leaders who have steered their ventures through growth cycles.
You can connect with a mentor for free via SCORE (subsidized by the SBA). SCORE’s mentors cover everything from functional specialties like marketing or finance or HR, or can advise on broad business strategy.
They can provide direct advice online or in-person – what a great resource!
Factor in Risk
Growth is a risk; that’s for sure. But you can help manage risk by including a “Plan B” in your overall plan. This should account for variables that might disrupt your plans along the way. Things that might crop up include problems with supply chain, product development, hiring, cash flow, or even patent issues.
Again, refer to your SWOT analysis and map out the risks that your business may be vulnerable to. Then think of ways to mitigate them.
Don’t Let Cash Flow Kill Your Dreams
Cash flow is one of the biggest reasons why small businesses fail and is a valid concern that impacts growth. Expansion requires investment – inventory, marketing, new hire recruitment, etc. If the balance and timing of the cash in and out of your business isn’t optimized then staying on top of your expenses can quickly get tricky.
As you put your growth plans together, add a cash flow forecast to the mix.
Build your business credit score so that you can improve your chances of getting a loan should you need it. You could also consider applying for a business line of credit before you need the cash.
By setting one up in advance, you have the confidence that you can draw on the cash when you need it. Unlike a loan that you must repay on a fixed monthly basis, a line of credit can be repaid at any point in time.
If you don’t use it, your balance is zero – making it a great safety net for unexpected changes in cash flow.
Another cash flow management option to consider comes in the form of alternative funding like that offered by Fundbox. Fundbox can help you fix cash flow by advancing payments for your outstanding invoices.
The Bottom Line
Being prepared for growth is the common thread here. Your business plan can help, and no it doesn’t need to be that one-off document that you burned the midnight oil over just to put in front of your bank manager one time.
Instead, think of it as a living, breathing part of your business that helps you steer your course – kind of like a map for a new adventure. Revisit and update it often.
Rachel Taylor is a Senior Marketing Manager at Fundbox where she manages Fundbox’s online and offline partner marketing programs. Before Fundbox, Rachel also managed partner marketing initiatives to drive small business acquisition at Intuit, the maker of QuickBooks and TurboTax.