Given the rapidly moving changes in our marketplace, the challenge for the entrepreneurial company is how and when to grow. And this leads to other major questions that can be difficult to answer.
- What strategies should be used to facilitate growth?
- How do you know whether these strategies are appropriate for your business?
- Are there problems with your business structure that need resolving before you can implement the growth strategy selected?
- How can you build on your strengths and compensate for your weaknesses?
- How might the growth strategy selected present new risks or make you vulnerable and, if so, to whom?
- Is this the right time to grow?
- That is, have you put a proper foundation for growth in place?
- Is capital available to fuel growth?
- Are market conditions ripe for growth opportunities?
Setting the Stage for Growth: Internal Factors
Before you can prepare your company for growth, you need to analyze its strengths and weaknesses. Looking for what’s working well serves to concentrate your efforts where you have the best chance of success. Looking for strengths enables you to also spot the weaknesses. Start with these internal areas:
Costs and revenue
Examine every part of your business. Is revenue rising or falling? How about profit margin? Which divisions or departments stand out? Why? Do you enjoy a strong positive cash flow?
Do certain employees show exceptional skills or produce outstanding results? Where in the company is the strongest management, organization and planning? Do you have the talent on staff to handle anticipated growth, or would you have to hire new personnel?
Are the areas that seem to be trouble-free functioning with little supervision and always delivering results? How do the managers in these areas achieve such consistent results?
Philosophy or mission?
Do you have a written statement describing your company’s philosophy or mission? Does it define the essence of your business exactly so that you know which kinds of activities fit your company’s goals and which don’t? Are you diluting your resources by engaging in any activities outside your mission? Have you developed a set of core values, and have your employees embraced those values?
Setting the Stage for Growth: External Factors
Once you’ve sized up your business internally, take a long and careful look at the external factors that should reveal whether you are in a position to take advantage of current business trends and cycles. These include the following
Is your market share—your company’s percentage of estimated total business available—increasing or decreasing? Is your marketing strategy based on careful research or on instinct and hunches? Is your customer or client base shrinking?
Do you know exactly who your competitors are, and where they pose the largest threat? Which part of your business is most vulnerable to competition and which is least vulnerable? Are some parts of your market becoming crowded with competitors?
Are changes in economic conditions—interest rates, inflation, housing starts, industry earnings—likely to affect your company? Do you make efforts to stay on top of things so that you can anticipate changes in the marketplace, or are you often surprised by developments that affect your company?
Your answers to these questions will give you an idea of where your company is strong and where it could improve as well as which type of growth strategy would be best. Consider the questions carefully and respond as if your company’s future growth depends upon your answering them thoughtfully – because it does.