If your business isn’t expanding, it’s failing. Business stagnation means you are falling behind the competition and losing market momentum, so no growth is really negative growth. Every business needs to have an expansion strategy, and the best way to ensure success is by creating an action plan for business growth.
Grow or Fail
Businesses may not fail right away, but they do atrophy over time unless they are properly nurtured. According to the U.S. Small Business Administration, about 20 percent of businesses survive their first year of operation, about half of businesses fail after five years, and only one-third see their 10th year. These survival rates have been surprisingly consistent over the years, and the longer a business survives, the more likely it will continue operations for years to come. That’s why it’s essential to have an action plan for business growth.
The reasons businesses fail vary. According to the Global Entrepreneurship Report, more than half of businesses fail because of lack of profitability or poor financing. Too often, entrepreneurs become so confident in their success that they fail to take into account market changes and operational realities.
Having a well-conceived action plan for business growth can rein in overconfidence and inject some reality into business expansion.
A Step-by-Step Action Plan
There are a number of ways to develop an action plan to build your business. Here are some of the steps we consider vital when outlining a plan of attack to ensure business growth:
- Identify areas of opportunity. Where is your best opportunity for revenue growth and increasing market penetration? Is it adding new products? Opening more locations? Expanding sales? Perhaps your best opportunity is to increase sales volume with existing customers. Whatever your growth path, be clear about your targets.
- Write an executive summary. Write a synopsis of your business growth strategy and how you plan to get from where you are today to where you want to be. Also write a summary of your current business mission, the goods you offer, and the customers you serve.
- Perform a SWOT analysis. Identify your strengths, weaknesses, opportunities, and threats as they relate to your growth strategy. Be specific in each category to gain a full understanding of your goals and the obstacles that could stand in your way.
- Define the resources you need for success. Once you have completed your SWOT analysis, you should be able to develop an inventory of what you need to succeed. Do you need new staff, new equipment, new marketing resources?
- Develop a five-year plan. With a basic understanding of goals, potential obstacles, and the resources required, you can develop a five-year plan to achieve your growth objective. Be certain to include metrics for success as well as a timeline for adding the necessary resources such as staff, marketing, and new products or services.
- Develop a financial plan to execute your five-year plan. Once you have your road map defined, you can assess costs as they relate to your growth milestones. Assess your current financial situation and outline predictable operational costs. Determine how much capital you will need to implement different phases of your action plan. Determine how much profit you can put into capitalization and whether you need to borrow or raise additional capital. As part of your financial plan, see if there are any operational costs you can reduce or eliminate to help you reach your goal.
- Review and refine your plan regularly. A growth plan is a living thing and needs to be revised regularly. Determine if you are meeting your growth objectives, and if you aren’t, revise your growth plan. Key performance indicators are a good way to keep your plan on track and help you revise your strategy to promote ongoing growth.
As you develop your action plan, you have to assess whether or not you can afford to execute your growth strategy. Budgeting is an ongoing balancing act, identifying areas where you need to invest, determining how much of your profits you can put back into the business, and identifying areas where you can cut overhead.
Failure to control operation costs is one issue that causes many small businesses to fail. Maintaining office space and furnishings, paying utilities, paying for computers and telecom services—these expenses add up and can take a toll on your bottom line. If you are running a business such as a manufacturing plant, where everyone needs to be at one location, you can’t avoid some of these expenses. However, more businesses are cutting overhead by encouraging telecommuting and a remote worker model, freeing up cash for strategic investment.
For example, Automatic, the company behind WordPress, recently closed the doors of its elegant San Francisco offices and opted to have all of its employees work remotely. The offices were largely unused, since most workers were already working offsite, and so the company opted to free up more cash for strategic investments. This may be an extreme example; however, it demonstrates that there are creative ways you can cut operating overhead.
More companies are keeping their operations nimble and cutting expenses by promoting telecommuting. Giving workers the freedom to work remotely increases productivity while cutting costs, and it allows companies to hire the best talent available, no matter where they are located. Download The Productivity Hacker's Guide to Integrating Remote Teams for tips on streamlining communication with your remote staff.
Spoke was developed to help companies reduce expenses and promote collaboration by turning employees’ smartphones into a virtual office phone system. With Spoke, workers carry their office phone extension with them, complete with auto-attendant, voice mail, smart directories, group calling, and other features you would expect from any sophisticated office phone system. And with Spoke, you eliminate the cost of a central office phone infrastructure.
Planning for growth is a matter of identifying new opportunities and developing new revenue channels without incurring crippling operating costs.
Tools such as Spoke should be part of your action plan for business growth, since they promote productivity while cutting overhead.