If you’re thinking about scaling your small business, many questions will spring to mind. When the time comes to expand your venture beyond sole proprietorship or a few employees, you’ll need to avoid straining existing resources and impacting current operations. Keeping those customers happy while you grow is an essential skill many owners aspire to.
Doing so in a sustainable manner is increasingly desirable, not only from a personal ethics perspective, but when considering growing legislation to stamp out wasteful practices for the benefit of our environment. Sustainability in business growth also includes keeping your company viable throughout a potentially rocky process.
Continue reading for insights on smooth and impactful evolution, and how you can implement these in a sustainable manner, both for your business, and the planet.
1. Build a Solid Foundation
Sustainable growth begins with ample financial prep work. Without a secure footing, even the most prudent expansion plans can falter. Transparent and current records allow for sound decision-making. Retaining an experienced financial planner to assist you with tracking key metrics will enable you to readily identify the best times for making your next moves, whether that’s hiring, introducing new products, or new capital expenditures on vehicles or other high-cost equipment.
A well-crafted budget is the roadmap for strategic expansion. It allows you to allocate resources effectively and anticipate potential financial shortfalls. To that end, an emergency fund and contingency plans must be established to address challenges, including economic slowdowns or other unexpected disruptions.
2. Choose Funding Options Wisely
Securing the capital for effective growth in your small business is one of the most important decisions you'll face. The way you obtain this resource can significantly impact your growth's sustainability, as well as your brand credibility. Luckily, there are many options and strategies for intelligent allocation.
If you have established creditworthiness, a traditional bank loan affords you potentially low-interest rates and a predictable repayment schedule. And if you happen to experience sudden and rapid growth, then you may even opt to enlist the support of venture capital investors. This is another great option if you don't mind relinquishing partial ownership and autonomy of your enterprise. When you work with angel investors, you may even be able to negotiate more favourable terms compared to banks.
If you are concerned about losing equity in your business, then you could always turn to crowdfunding as well. Crowdfunding platforms are another option that enables owners to secure funds from pools of individual backers, and all whilst you simultaneously validate product demand and generate pre-sales revenue.
Finally, for owners hoping to retain complete control, you can "bootstrap" or self-fund the business via your personal savings accounts or assistance from friends, family, or colleagues with whom you've established trusted relationships. Whilst bootstrapping may typically require you and your fellow partners to forgo a salary in order to invest all of your startup budget into your business, a focused strategy can help you bootstrap your way to profitability.
When making these decisions, consider where the funds have come from. If you want to build an ethical franchise and keep away from negative press, all your funding must be able to be traced back to sustainable sources.
3. Improve Cash Flow Management
Maintaining adequate liquidity to meet obligations while remaining agile to respond to growth opportunities is crucial. Monitor revenue and expenses with an intuitive accounting software package, and use forecasting tools to maintain real-time cash position visibility while making data-driven decisions.
Use automated invoicing systems to simplify your billing process and allow customers to make timely payments with multiple options for their convenience. Consider incentivizing early payments with rewards or discounts for faster receivables and improved cash flow.
On the payables side, negotiate favourable terms with your clients and suppliers to keep fees and interest expenses in check. This will preserve your working capital for more critical operational priorities.
4. Leverage Automation and Technology
Identify time-consuming and repetitive tasks and processes within your operations that drain your resources, either human or financial. Streamlining these chores allows you to improve efficiency and productivity. Potential candidates include data entry, ordering inventory, or perhaps customer service inquiries, which could be offloaded to third parties or an automated solution such as email or a chat bot.
Outsourcing some or all of your computing tasks to a cloud solution frees many small business owners from the rigours of tedious software patching and hardware configuration. Empower yourself and your staff to work smarter, not harder. Invest in the training and support your human resources to do their job effectively.
5. Prioritise Profitability
Many owners find fixating on revenue growth tempting. However, actual long-term viability comes from sound cash management and healthy margins. Frequently assess whether your sales adequately cover expenses associated with sourcing, producing, and delivering your products and services.
Avoid overextending your resources in pursuit of revenue expansion. Instead, ensure your pricing approach adequately captures the total value of your products. Consider different pricing methods, including dynamic, tiered, and value-based structures, and consider customer preferences when making these decisions. The key to sustainable growth from a customer’s perspective is positive brand association. Keep your clients happy whilst you make the largest changes behind the scenes.
6. Develop Strategic Relationships
Collaborating with complementary businesses can often lead to growth and market development prospects. Working with your industry's suppliers, distributors, and other adjacent stakeholders lets you access new shoppers and increase competitiveness. Expand your reach by identifying firms to unite with via joint ventures. Leverage each other's strengths and expertise to drive expansion and create mutual value.
Bolster staff loyalty within your team by implementing comprehensive insurance and retirement packages. During a risky time, the last thing you want is a quick turnover of staff, requiring you to waste time on training new employees.
7. Monitor and Adapt As Needed
Sustaining growth requires dexterity and quality information flow. Religiously track your key performance indicators, detailing your organisation's health and performance. Maintain a flexible mindset and be willing to adjust your monetary strategies in response to new data and consumer preferences.
Respond to customer concerns, and stay abreast of shifting attitudes in the wider business arena — you don’t want to be on the wrong end of an exposé regarding carbon emissions or low pay for workers, even if cutting corners has been saving you money thus far. For an ethically-minded business owner, growing your margins is just as important as making a positive contribution to your sector, or the wider world.
Remember, as a small enterprise teamed up with a skilled financial advisor, you have the advantage of agility over many larger and less adaptable institutions. Your ability to pivot quickly, innovate, and respond to changing market dynamics gives you a competitive edge.
Make financially and ethically responsible decisions, and don’t be tempted to jump the gun in the race for the largest revenue increases. By following these strategies, you’ll be able to scale your business successfully, and sustainably.
