ADVOCATE COLUMN 4th WEEK JUNE 2017
Just as it is important for new businesses to enter the market and for Northland to have an environment that is attractive to inward investment, so is the need to grow existing businesses. Obviously there are a number of reasons why a business may stop growing and some of such as external economic conditions may be beyond the control of the owner. There is also the possibility that the owner is content with the scale of their business and may have no desire to grow it. However at some stage all business owners must exit their businesses and a growth strategy can be closely linked to the business’s succession plan if done correctly.
In part, stopping growing may be a function of a business’s life-cycle. When the business starts it may have relied heavily on a plan, over time as the business becomes more stable the plan may be ignored. So it is important to review, monitor an update a plan so it remains relevant to the age of the business and its owner’s aspirations.
Cashflow can also be a barrier to growth, as during these periods both invoicing and debt is likely to increase if not managed carefully. Carrying additional inventory or extending terms of trade during this period can be fatal and lead to business failure. For this reason as the business grows so will the need for better processes and an integrated business management system. This allows a business to monitor its performance and identify trends before they have a negative impact on business success.
Businesses also can become complacence or comfortable leading to failure to explore new markets or diversify their offer or cease to explore innovative solutions to achieve business success. These are just some of many reasons why a business may fail to maintain growth. Above all else though the retention of existing customers or the inability to find new ones.
To maintain this customer focus requires the owner to continually consider the journey the buyer takes and how the customer interacts with the company, the products, service and brand along every point of that journey. This may not be something that the owner is capable of doing objectively and it may be worth them engaging independent expert assistance to ensure they have the confidence that what they are doing is indeed correct. This external support can provide insight as to where they can improve and how they can attract new customers. Because without customers there can be no business.