Who wouldn’t like to see their business grow? However, the right questions would be how and when it would be convenient to take the business to the next level, so that the growth doesn’t turn against the business, causing a growth crisis within the company.
The answer to such question would, by default, be “Of course it’s convenient to grow. Who wouldn’t like to see their business grow?” This is true, since one of the main objectives that any businessperson or entrepreneur sets is to achieve the growth of their business or project.
Actually, the right questions would be how and when it would be convenient to take the business to the next level, so that the growth doesn’t turn against the business.
In order to reach an objective it’s necessary to set goals and action plans that make it possible to get closer to the initial idea. Growth within a company can be achieved thanks to a substantial increase in sales, bigger billings and production, new points of sale, new products or services on offer and a bigger infrastructure, among others.
However, irrespective of which part of the business will grow, it happens many times that the expansion of a business or project brings about a “growth crisis.”
A crisis can be defined as “an abrupt change in the established variables which, once it emerges, restricts the ability to act.” In this case, the very growth will entail a shift in the variables which had been working properly so far. That is to say, the sales volumes are bound to be different, production is likely to increase, almost certainly new participants will join the process and the delivery times will be different. When all these changes are made, the ability to act and respond of those at the forefront of the company will be restricted. From there on, procedures will need to change as well.
It’s essential that those who run a business or project are attentive enough to be able to identify this crisis in time. What’s dangerous about this situation is that, as it’s not initially a financial problem (indeed, quite the opposite since the income would be the first thing that increases), the alarms might be raised too late.
In a bid to sell more and more, production might be neglected. This is when the process starts to be delayed, putting deliveries off and making the client feel displeased as a result. If we want to speed up production, it might happen that the final product goes wrong, meaning that there might be many more lost resources.
It’s important to remember that the remaining actors in the chain, such as suppliers, are likely to keep on working at the same pace as before, so the delay might be external to the organization.
So, in order to take your business to the next level without going awry, we share five points to bear in mind:
1. Planning
This step is as important as it is difficult. The difficulty lies in being able to plan the magnitude and window of growth, since there are many factors (both internal and external) that have an impact on the expansion.
A good exercise would be to think of three different scenarios. For the first one, the growth would be quick and within a short period of time. For the second one, the expansion would be moderate and within a longer period of time. Finally, growth would be achieved slowly and in the long-run. Then, an action plan should be designed for each of these cases.
2. Financing / indebtedness
It’s very difficult to achieve growth without prior financial leverage. In other words, it’s practically impossible to take the business to the next level without prior investment. Before starting an expansion project, it’s crucial to know how it’ll be financed. Financing could be provided by the partners, or external money might be needed. Irrespective of the source of funding chosen, it’s essential to assess it before abrupt changes take place.
3. Relationship with suppliers
A company’s supplier network should be deemed an asset. It’s crucial to forge good relationships with key suppliers. When going through a process of growth, or even before starting it, a good strategy would be to inform the suppliers about the changes that will take place within the business to make them part of the change and make them take on increasing commitment. An incentive program could even be developed for those suppliers who comply in an effective and timely manner.
4. Communication
Although good internal and external communication is always a must, during times of growth, when the room for maneuver reduces, having correct communication can make or break the process. Having smooth, clear and constant communication will make it possible to avoid or fix a mistake in time. It’s essential that the suppliers perfectly understand what we want from them, and also that the members of the company know the new tasks that they should carry out and in what period of time.
5. Relationship with the clients
Good communication also applies to clients; without them no business would be possible. It is therefore essential to let them play a part. Honesty is key. It’s better that, after specifying de delivery time, the client chooses to turn down the purchase instead of promising something impossible in order not to lose the sale; and then to have an unsatisfied client or a bad reputation as a result.
It will therefore always be convenient for a business to grow, but not without asking ourselves beforehand how and when to do it. If it can be planned, if we have enough resources and if the relationships are good and communication is right; then growth will be a guaranteed success.
At CreateTrade Capital we accompany the expansion of businesses from the financial point of view, so that growth is not synonymous of crisis. We offer trade instruments that help our clients get a quick and flexible cash flow and thus improve their relationships with suppliers. This way, we’re responsible for payment and our clients benefit from better trade conditions.
If you’re going through a process of growth, contact us without hesitation. We’re here to help you!
Until next time!
By Julieta Colella for Create Trade
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