Challenges of Growing Your Business - Planning Ahead
The plan that made sense for you a year ago isn't necessarily right for you now. Market conditions continually change, so you need to revisit and update your business plan regularly.
As your business grows, your strategy needs to evolve to suit your changed circumstances. For example, as you move from your Series A to your Series B funding your focus is likely to change from winning new customers to building profitable relationships and maximising growth with existing customers.
Existing business relationships often have greater potential for profit and can also provide reliable cash flow. Newer relationships may increase turnover, but the profit margins may be lower, which may not be sustainable.
Why is business planning important?
In a rapidly changing world, forecasting helps prevent organisations from becoming victims of circumstance. It’s far more effective to identify and address issues before they arise than to fire-fight a crisis. Robust planning also provides reassurance to potential investors who will want to see a strong financial model and a clear strategy for growth.
For firms looking to expand, enter new markets or develop additional product lines, it’s important to look ahead and explore both the positives and potential difficulties your business might face.
This will enable you to stay ahead of the game and develop a thriving, agile business which can readily respond to changing circumstances. A successful, flourishing business can also, in turn, provide more opportunities for employees through career progression and training, and attract the talent needed for sustained growth.
Some business will already be performing strongly without a forward plan in place. But it’s important to ask: could you be achieving more if you did have a comprehensive strategy?
At the same time, every business needs to be alert to new opportunities. There are obvious risks to relying solely on existing customers. Diversifying your customer base spreads those risks.
Following the same business model, but bigger, is not the only route to growth. There are other strategic options such as outsourcing or franchising that might provide better growth opportunities.
It's important not to assume that your current success means that you will automatically be able to take advantage of these opportunities. Every major move needs planning in the same way as a new business launch.
Watch out for being too opportunistic - ask yourself whether new ideas suit your strengths and your overall vision of where the business is going. Bear in mind that every new development brings with it changing risks. It's worth regularly reviewing the risks you face and developing contingency plans.
Top tips for business planning
Planning and forecasting is all about strategy, identifying what parts of your business are performing well and maximising opportunities. So, where do you start?
1. Understand where you currently are as a business
Before you can look ahead, you need to have a clear picture of where your businesses is in the present. This means identifying the parts of your firm which are performing well and the areas where a change of approach might be needed.
This largely comes down to the quality of your reporting which is a key part of understanding your business, so you should ensure you have clear procedures in place. However, it’s important to get the balance right as too much information can become a hindrance and cause you to lose overall focus.
2. Identify future opportunities
Often businesses operate in a ‘reactive mode’ where they respond to challenges or opportunities as and when they arise. To set yourself on a clear growth trajectory, it’s important to find the time to assess future opportunities such as new markets you could enter, additional revenue streams or potential mergers and acquisitions.
You should also think about your customer base. In an increasingly digital world, the way consumers interact with businesses is constantly changing which could mean placing a greater focus on your online presence or mobile capabilities.
3. Preparation is key
Once you understand where you are as a business and have identified new opportunities, you need to ensure you are fully prepared to take maximum advantage of them. Consider the systems, processes and reporting you have in place – are they fit for future expansion?
You should also look at the people you have within your business. Recruitment can be an expensive and time consuming process, especially with the current skills shortage facing organisations up and down the country. Making sure you have the necessary skills within your business ahead of time can help speed up the process.
Placing greater emphasis on investment in training and upskilling existing employees should therefore be an important part of your overall strategy and can reap huge rewards. You may also be able to take advantage of the Apprenticeship Levy to train up future talent at a relatively low cost.
4. Regularly review your plans
Finally, remember to regularly assess and update your strategy. In this rapidly changing market it’s imperative you measure how your business is performing and whether it is delivering on your plan. Forecasting is a key part of business growth. Make it a priority.
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