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Contributor: Business Development Bank of CanadaSay you have a successful small business. You have a few employees, and things are going fine. If you’re like many entrepreneurs, you may never take time to sit down and think about your future growth—how to take your company to the next level in a smart, disciplined way.
But growth is an issue many business owners ignore at their peril. In fact, it might just be one of the most important issues facing them as entrepreneurs. “If you decide not to grow, you may be paving a path to failure,” says Patrick Latour, Senior Vice President, Financing and Consulting at the Business Development Bank of Canada. “If you don’t grow, your competitors will, and that will put pressure on you.”
The good news, Latour says, is that business owners can create a road map to guide them and reduce their risk as they grow their enterprise. The road map can help them find more growth opportunities and avoid common mistakes, like failing to delegate responsibility to employees.
To develop your road map, start by committing time to outlining a plan for your growth, Latour says. It should include a few important basics:
Your growth plan could be anything from a rough, informal sketch to a full-blown, highly detailed strategic plan, including everything from a mission statement to scenario planning and financial forecasts.
What’s vital is getting the key players in your company on the same page, thinking about your future.
“If you’re going to grow, you should absolutely have a plan,” says Paul Cubbon, who teaches entrepreneurship and innovation at the University of British Columbia’s Sauder School of Business. “Failing to plan is planning to fail.”
Latour agrees. “The plan doesn’t have to be pages and pages long. Sometimes the simpler, the better. But if you don’t have a planned, disciplined approach to growth, you’re probably going to make more mistakes.”
Christopher Moreno is a firm believer in creating a growth plan—and following it with discipline. His event planning and production business, 365 Productions, was growing so quickly in 2011 that he and partner Ben Patience worried it was spinning out of control.
“We were concerned about having too many things on the conveyor belt,” Moreno says. “We said: Eventually the conveyor belt is going to be full, and something is going to fall off the end.”
The duo decided to embark on a strategic planning exercise. The process helped clarify their opportunities, risks and respective roles in the company. The result: a detailed five-year plan that included financial forecasts for three different growth scenarios.
The plan helped them boost sales to an expected $3.2 million this year from $1.8 million in 2010. They have even exceeded their goals, meeting their year-three targets in 18 months. And the plan has helped guide a successful international expansion into Britain and Australia.
Along the way, they made sure to meet regularly with employees to see if the plan needs any tweaking and check how their plan is being implemented by measuring progress against their benchmarks. “The plan is 10% of the work; the other 90% is actually doing it,” Moreno says. “If you don’t get in the car and drive, the roadmap is useless.”
You’ve decided you want to expand your small business—but aren’t sure how. Here are some growth do’s and don’ts.
Looking for growth opportunities? Don’t forget your existing clients. They could be your best path to expansion success. It’s usually much easier to find new business from current clients than to start afresh with untested ones. “Listen to existing clients, and see what they need,” says Patrick Latour. “Ask them how you can help them be even better. Can you help them in ways they don’t know about?” Latour also advises growth-oriented entrepreneurs to seek out opportunities to join the supply chains of multinational corporations.
Whatever you focus on as a growth opportunity, be sure it’s the right path for you and your business, says Paul Cubbon from the University of British Columbia’s Sauder School of Business. Don’t expand into new business areas just because you can. “People think growth will bring a more profitable situation. But they may grow from one to 20 employees and not make any more money, while working twice as hard,” Cubbon says. “It’s not just about growth. It’s about smart growth.” Be sure new business offers the same margins as you currently enjoy and helps you differentiate yourself from the competition.
Growing companies often wind up in trouble when the entrepreneur has trouble delegating decisions to staff. “Hire good people and trust them,” Latour says. “Let your people work, while you spend more time thinking about your strategic focus and your next move.”