Every business has their own goals and priorities; however there comes a point in time when every business owner starts considering growth as the business’s next goal. Growth by definition is when a business increases their operations by various methods which include mergers, takeovers, increasing output, franchising and opening the business in different locations. This list is just a glimpse of various methods that a business can use in order to expand, however expansion should not be taken lightly.
The reason why growth should not be taken lightly is because a larger business is inevitably more complex to manage then a smaller business. Rapid growth will affect the overall operation of the business and most business owners will lose control over their brainchild when it starts to grow exponentially. At the same time if a business offers a personal service to their customers it will be more difficult to offer the same level of services on a higher scale.
Furthermore, rapid growth can lead to cash flow problems and can leave the business in debt, especially if they do not have the resources to finance their growth. Many businesses will have no option but to borrow a substantial amount of money in order to finance their growth; these businesses could rather use their current resources to improve their current business module. However there is no doubt that a business can benefit immensely from growth if they consider every aspect of the business. Some of the most profound benefits of expansion are mentioned below,
- Increase in sales
- Increase in market foothold
- Increase in consumer awareness
- Economies of scale
- Increase in amount of investors
- Discounts from suppliers
- Reduction in variable costs
- Target a new market audience
Different types of growth
Although the list above exonerates the fact that growth can really benefit a business, how a business grows plays a crucial role in the success of this venture. There are two different types of growth that a business can utilize in order to increase their foothold in the market. These two types are mentioned below,
Rapid business growth
Rapid business growth is arguably very risky but it has the capacity of increasing your businesses operation immediately. A business can achieve rapid growth by buying out a competitor, merging with another company and opening a new business location. These are all rapid mediums of growth and have a certain risk factor attached to them, especially if the business does not meticulously consider the magnitude of this type of growth.
Organic business growth
This is considered to be a safer type of growth as the business will try to achieve their new goals in a steady and persistent manner. A business can grow organically by offering existing products or services to new customers, offering current products to a new geographical area and by increasing distribution channels. Even this type of growth will demand a high degree of attention to detail, but the risk factor attached decreases by a substantial rate. Your business will start growing at a steady pace which will allow you to make the strategic decisions to align with the growth, while in rapid growth the business will have no time to align with the growth.
How to avoid problems while growing your business
By now it should be clear how imperative it is that every business is prepared before they start instilling growth strategies in their current business module. This is exactly why we have articulated a list of factors which every business owner should take into consideration before they start expanding their businesses. These factors are mentioned below,
1. Plan and strategize your business growth
Before a business even plans on implementing growth strategies it is imperative that they conduct thorough market research. The business should only conduct qualitative research but they should also use quantifiable research techniques. The business should be prepared for the aftermath of the growth as, if they fail to align with the growth, it will seriously hamper the success of their growth. Core departments such as finance and HR should integrate together to make sure that the business is prepared for the impeding growth in order to reduce the problems while growing.
2. Bring the whole team on board
Your employees will have to be educated about the intended growth and why the business has shifted towards this new goal. By nature employees will not openly accept change, especially if it has the chance of reducing their job security. This is exactly why every business should notify every employee about the intended strategies so that every member of the staff welcomes the change with open arms. Furthermore, these employees will have a sense of belonging if they are notified about the intended changes and there is higher chance that they perform their duties at their optimum level. The only way a business can effectively maintain employee morale while growing is by leading staff through growth.
3. Make the appropriate preparations
Finally the last aspect which will reduce the chances of problems occurring while growing is by ensuring that the business is prepared in every aspect. Some of the aspects which the business should consider include the output of the business, distributional channels, profit sharing, asset management and stock management. The growth will affect the business in many different aspects and making the appropriate changes will ensure that your business is prepared for the new structure of the change.
By taking all of these factors into perspective a business can reduce the risk attached to growth. Paying attention to detail and scrutinizing the business from every aspect plays an integral role in the success of the growth. This is exactly why it is imperative that every business owner contemplating growth should first prepare for what growth entails, remember fortune favors the ones who are prepared.