Business growth can happen for a number of reasons but it usually happens because a company wants to expand into new products/ services/ markets, reduce risk by diversifying, create more interesting and challenging work for its employees (which may make recruitment and retention easier) or increase profits and/ or the value of the business.
Although growth is to benefit a business (and sometimes the owners), it can be dangerous and cause heavy drain on cash flow, or stretch employees past their limits creating low morale.
That’s why assessing your performance is essential to making sure that it is moving in the right direction, and you are prepared for changes that come with growth. It is not just about making sure sales are increasing, but a quality assessment will reveal problems you can prevent, potential challenges to prepare for, and efficient systems that you can optimise.
What Strong Business Performance Really Looks Like
A good mix of qualitative and quantitative goals paves the way for a strong business performance. This is because a healthy business is not just made up of figures and sales, but it also relies on employee morale, customer retention and efficient internal communication channels. A strong business performance also means achieving success across all areas of the business, not just financially.
When assessing performance, businesses should measure a range of key performance indicators, including financial performance, customer performance, operational performance, employee performance, and market performance. Whilst we’re not saying that your net profit margin and revenue growth rate are not important (because they definitely are), it is essential to take into account all areas of the business when assessing business performance to gain a complete understanding of its overall success.
How to Identify the Barriers Holding Back Your Growth
Business growth doesn’t tend to stop suddenly, it is usually a slow decline, which gives you many opportunities to develop and get back on track. To improve your business growth, you have to know what is holding you back and where to adapt. Therefore, we’ve written below 5 common barriers to business growth and how you can overcome them.
Cash Flow Gaps
Business growth often creates cash flow gaps because costs increase before revenue catches up. Upfront expenses such as inventory, equipment, larger premises, and initial marketing campaigns can put pressure on cash flow, even when the business is growing. To prevent cash flow gaps, it is essential to perform detailed cash flow forecasts so you can see problems before they arise. If you have already hit a cash flow problem, reducing costs, negotiating longer payment terms with suppliers and shifting to upfront customer payments are all ways to support you back to business growth.
Not Knowing Your Competitors
As the famous saying goes “keep your friends close, but your enemies closer,” knowing your competitors is essential and can majorly set back business growth if you don’t do your research on them. This is because without knowing your competitors, you could be underpricing or overpricing, missing market shifts or wasting marketing spend on the same audience.
Poor Market Focus
Put yourself in your audience’s shoes, what are they looking for in your product or service? Aiming your product at the wrong people or having incorrect messaging can waste your marketing budget completely. When carrying out your market research, think about your customers’ functional needs, emotional needs, and social needs to give you a strong idea of who your customer is and how you can reach them.
Capacity
Capacity can be a major barrier to growth, whether it is a lack of staff, time, space or equipment. If a business reaches its capacity in one of these areas, it may struggle to keep up with demand, leading to delays, lower quality and potentially losing customers. However, there are ways to prevent capacity issues, such as planning ahead, and considering what you will need as demand increases (more staff or new equipment).
Poor systems and processes
Even processes that have worked for years can become obsolete, so it is critical to make sure that systems are regularly checked and adapted when necessary. If businesses do not keep up to date with streamlined systems it can cause major barriers in growth, as competitors can already be ahead of the game.
The Advantages of Having a Business Growth Strategy
Business growth strategies are essential to keeping your company exciting and up to date, they can include releasing new or improved products, using new technologies, or entering new markets. There are many benefits to business growth including increased profits, diversification, and enhanced reputation. A well planned growth strategy also allows businesses to adapt more confidently to changing market conditions.
Furthermore, it is critical to make sure that all internal stakeholders such as employees and shareholders, are kept informed of changes that are being made, and that they have the correct support to help them adapt. Change management, which relies on strategies like clear communication, structured training, and empathetic leadership is a great way to make sure your employees are eased into business shifts.
Why 360 Accountants’ Management Consultancy Helps You Grow Faster
Business growth can be difficult, but with 360 Accountants’ management consultancy service, driving your business forward can be made easier. Not only have we scaled our own business but we have supported many others across a wide range of industries every step of the way. We offer services such as assessing your budgeting, reviewing your management accounting, and assisting with recruitment of an in house accountant. If your business is in need of stronger financial processes, and coaching to help implement new changes, get in touch with 360 Accountants now, our professional team is more than happy to help.
