Why is business growth important? A business growth strategy tailored for your business could be the answer to business success. Find out more here.
This article is published by Modoras Accounting (QLD) Pty Ltd V11022019
Why is business growth important?
Why is business growth important?
You may not want to build an enormous empire, but a certain level of growth is vital for the ongoing profitability and success of your business.
Business growth means you can allow your business to build momentum. And momentum can do wonderful things for your business. Things like allow you to take on employees, service new areas, expand your offerings, or even merge with another organisation, either by acquiring other businesses or allowing your business to be acquired.
Growth doesn’t always have to mean that you are building an empire – you might prefer to think of it as your business is maturing. You know what works, and what doesn’t, and have reached the point in your business where you are no longer experimenting but are instead investing in what is proven to work.
This can be done by using planned growth strategies and executing them.
Let’s go into more detail on why business growth is important.
Avoid being left behind by your competitors
If your competitors are smart and savvy, they’ll be considering new products, new markets, and new ways to increase sales and improve profitability.
You don’t want your business to stagnate while your competitors leap ahead. It’s vital to stay relevant in a changing market. And this is why smart businesses ensure they are applying proven business growth strategies to keep on top of market conditions.
Maintaining a growth-centric attitude is essential. If you find your market is changing or your competitors are gaining an edge, you need to be willing to pivot and to try new things. This doesn’t mean abandoning your tried-and-tested products and services, but it does mean that you should be constantly open to ideas on how you can add to, and evolve your existing offering.
At its most simple, today’s consumers constantly want more. They expect more. And they will find it elsewhere if you can’t provide it.
Avoid earnings from shrinking
Business growth isn’t just about the dollars, but they sure are important. Without implementing growth strategies that focus on improving profitability – you could find yourself falling behind as things around you grow.
Many businesses have taken a hit when supplier prices go up or currencies fluctuate beyond projections; others have floundered when a supplier signs an exclusive deal with a competitor, freezing them out of the market.
On a more positive, but no less frustrating note, some businesses find that their existing partners are unable to meet demand as their business takes off. If you are constantly analysing your numbers and keeping tabs on alternative suppliers, you can better respond to both positives and negatives, grow sustainably and make well-informed decisions to improve financial performance.
As a starting point, businesses that want to be poised for growth should:
- Get more efficient: Make sure you are making the most of your available resources. Investigate options like just-in-time supply chain and flexible working that means you can adjust to demand.
- Analyse your costs: All businesses should know where their money is going, and this is even more true for businesses seeking growth.
- Calculate what it costs to attract a new client: Is it cost-effective to get more clients? Or could you achieve your desired growth by increasing what you can offer to existing clients?
- Check your key business drivers: Can you make small changes that have a big impact?
Growth is crucial to long term survival
Staying the same as you were 10, 20 or 50 years ago is a nice notion but how many businesses actually succeed by remaining the same?
By all means – retain the service values that make your business unique but know that growth is important to being able to continue providing that service to your loyal customers. If your current products and services are proving successful, brilliant! But that doesn’t mean you shouldn’t be on the lookout for ways to expand your offering or to target new clients and industries as well as continuing to wow your existing client base.
Companies that are growing take on a vivacious personality. There is momentum in the business, employees are motivated, and everyone is working toward the success of the business. As you grow, this positive energy has benefits for your existing customers too.
Ultimately, successful businesses adapt and evolve. By seeking growth, you’ll be more likely to keep up with industry standards for income, development and quality. In addition, growing businesses are more likely to retain employees as they can see and plan for a successful future within your organisation.
Growth creates opportunities
Of course, new opportunities can often require financial investment. Spending money to make money, as the saying goes. But a business that isn’t growing doesn’t have surplus cashflow for opportunities that may come along.
A cashflow that has some room to move gives you the means to create opportunities for new growth avenues within your business. If you’ve been thinking about a new product, or a new market to explore – cashflow can help with this. Furthermore, in today’s tighter economic market, a strong cashflow can improve your chances of additional borrowing capacity if that’s required for your business.
Make the most of economies of scale
Being growth focused can also make your business more efficient. As you grow, you may find yourself with less costly barriers to entry for new products or services that may be complementary to your current offering. This is because you can use your existing equipment to head down this new path. Many businesses find that they can increase plant and staff utilisation resulting in lower overheads.
Ready, set, grow
The first step to entering a growth phase in your business is to identify opportunities for growth. This might be new products and services, new geographical areas, new clients and industries, or expanding your relationships with existing customers.
When you understand where your business is now, the next step is to set realistic growth targets. These might be financial, or they might be related to securing new clients or growing your team.
Once you know where you are starting from and what you are wanting to achieve, you can then figure out how to get there. And if you need help with determining which growth strategies are best for your business, we’re here to help.
A Modoras Business Advisor can help guide you in identifying growth opportunities for your business and proven strategies to help you achieve success. Contact us today on 1300 888 803.
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