This is the third in an exclusive series of business growth articles from ‘Start to Grow’ – a start-up business growth book authored by Philip Bain; co-founder of ShredBank and Visiting Professor of the Ulster University Business School
You can’t become bigger and get double-digit growth unless you have the desire to do it.
This may seem like an obvious point, but try achieving something challenging without having the desire to do it. If you don’t have a deep desire to grow and take on the additional risk and investment required to take the business to new levels, then don’t do it.
One thing I learnt when playing rugby in school (the game I stopped the first chance I got), was that if you rugby tackle someone half-heartedly, you will always get hurt. If you tackle someone reluctantly, with a bit of self-doubt, hold back from giving it your full focus, then you will find your face in the muck at best, or get some guy’s heel in your teeth at worst!
Half-hearted rugby tackles don’t work and the same applies to half-hearted aspirations to grow your business. Sure, many look at the big corporations and dream, but that’s all it is – a dream. It’s not a strong desire for action! It has always intrigued me how one corner shop stays, well, a corner shop, while another can become a global retail giant. Some people are very happy and very content to remain in the corner shop, while others are hungry for more. However, it takes unwavering desire, determination and relentless focus. Are you hungry for more?
You need a load of money in the bank account to scale your business. Having surplus cash gives you the ability to grow. It allows you to make some speculative decisions such as employing a new sales rep, setting up a new office or investing in more equipment, even before the sales are there to immediately justify the investment. If your overdraft is maxed and cash flow is strained, and you are struggling to make payroll, then you are not in a position to grow your business.
It all comes back to the importance of selling products or services that make money to allow you to cash build. There is no point in looking to grow your business if your existing business model doesn’t yet make money.
Growing your business requires money in order to invest in new infrastructure, employ people, introduce new systems and processes, and increase your marketing spend. Surplus cash will come through the previous profits that you have retained in the business, but it will also come through the increased profitable sales that your company may already be beginning to generate. Once the trajectory is going in the right direction, then you can start to consider making investments that will allow your business to grow.
My bar is set at a certain level but there are two guys (and only two) who have ever made me want to raise the bar exponentially and grow my business.
One of them would directly challenge me to think big, raise the bar, push me and my business partner to not settle for the corner shop… but at least think about getting another one! I remember my heart sinking when he said to James and I that the business would need a six-figure investment to grow over the next few years. He knew the numbers that were required because he had grown different businesses many times before, and instinctively and experientially knew what was required to scale.
He was right, that was what we needed to grow our business – money and lots of it! With my other friend and mentor, I was always inspired by not only how he grew his own businesses but how he did it for other people’s businesses too. After a conversation with him, I realised that my perspective had been too narrow and vision too limited. I simply walked away from a chat with him saying, “What am I doing?… I have got to think bigger!!” Get a mentor who will push you to raise the bar… and listen to them!
Is the market big enough for your growth aspirations and what is that market worth? To grow a business by £1 million, it would take at least £2 million untapped market to make the strategy viable. Sometimes your business is stagnating simply because you have successfully tapped the market. Growing the business may need to be about finding new revenue streams, looking at new products and services, taking market share from your competitors, or moving beyond your current geographical reach. Growing your business by going into a new region is an exciting venture. Maybe it’s just me, but I used to get a real kick out of managing a consultancy practice that had offices in different regions.
However, there are significant costs involved to expand geographically; that new office, employing a couple of new staff members, building a new business in a different country with little or no sales – at least in the early days. New markets may be the only way to scale the business but make sure you do the necessary research, and put the figures together to minimise the risk before you outlay the costs.
Scaling requires the business to not just grow, but to ‘grow up’. There comes a time when the hiring process has to be more formalised, systems and processes need to be embedded into the organisation and your business needs to manage its finances more effectively. Growing a business means that you need to keep a close eye on the cash flow, and the profitability of the company.
You can’t keep a close eye on the numbers of your business by glancing at them in your accountant’s office six months after your financial year-end. As my mentor told my business partner and I, “You need monthly management accounts, boys.” This is obvious to us now, but it wasn’t then.
And finally, these systems and processes ensure that you can deliver the same customer experience with 1,000 customers that you used to do at the start with only 10 customers – and still stay effective, efficient and, of course, profitable!
All proceeds from the sale of Start to Grow are for The Princes’ Trust and the book can be ordered from here