The 5 Things You Need to Know About Growing Your Business Making it Happen
Making It Happen Series Part 2: Growth Fundamentals for every business owner
The second article in the series stemming from conversations with successful South Africa entrepreneurs covers the growth fundamentals that all business owners should be aware of when starting up and building their businesses.
Every business owners goal is to grow their business – but this growth does not happen by accident and growth can cause its own problems.
Here we talk about some of the challenges that entrepreneurs can face in setting their businesses up for success.
- Treat Your Small Business Like a Big Deal
This gem of insight came from my discussion with Israel – and it really resonates.
What he means is that if you are really focused on setting up your business for success, you should take the time to get some basics in place. As we have said before, having a good or even a great idea is not enough, you must back this idea up with proper planning and careful consideration if you are to truly succeed.
Here are some if important elements that you should consider that many new business owners forget to focus on in their excitement to start their business and get going:
- Define your administrative requirements & processes:
These may be HR, accounting or general administration related and these are the areas where some planning ahead of starting the business will help you accelerate your growth in the short, medium, and long term.
- Business mapping and business planning
You must know and understand your business and have a solid plan for your set up and growth. This includes defining your competitive advantage and how your business will make money.
- Sales planning:
You need to know how you will get the sales that will be lifeblood of your business. There is no space for winging this and knowing who your customers are and how you will get to them is critically important
This is a topic that not many small businesses think about, however, governance structures lend accountability to your planning and provide alternative perspectives for accessing your business opportunities.
We have said before that being an entrepreneur and a business owner can be a lonely place and you may want to consider having a Board of Directors structure that can act as advisors and accountability structures.
This should be part of your business planning and your infrastructure should be aet up to be sufficiently flexible to allow for future growth.
2. Stabilise Your Foundations to Prepare for Growth
Growth brings with it a myriad of challenges and doesn’t come without its risks.
Setting up for growth is another area where many smaller enterprises fall short. Growth doesn’t just happen, and you must plan for growth and be prepared for these complexities.
“Growth can be a double edged sword if it is not fostered in an environment structured for growth” – Tumelo
Growth brings additional revenue and revenue streams accompanied by increased costs and complexities such as additional staff, increased input costs, more complex supply chains and more route to market challenges. This is where treating your small business like a big deal up front will foster your growth plans.
Your role as CEO in driving the busines and working on the business will also become increasingly important to your growth planning and success.
Growth doesn’t happen by accident – it is the result of careful thought and meticulous planning based on solid business foundations.
3. Develop Cash Flow Resilience
Another critical element of your growth planning fundamentals is to build cash flow resilience. Managing cash flow is one of the key reasons that smaller businesses fail over the medium term.
Properly protecting and strategically building your cash flow reserves will enable you to fund your growth plans either through business funding or through investment and loans and will provide you with multiple investment options.
Your financial literacy and financial management are key to your success here
4. Understand the Philosophy of the Investor
As a business owner seeking to fund your business idea or fund your business growth plans, it can be easy to get caught up with a focus on how good a business idea you have.
You can get caught up with an internal focus and forget about focusing on what your prospective investors may be looking for.
“The moment the entrepreneur can see the market the same way the investor sees it, then she/he will know what the investor is looking for” – Tumelo.
As with all successful selling techniques, talking the language if your customers and overcoming objectives they may have will allow you to close sales faster and better. In finding an investor for your business, you should be applying the same sales techniques in planning your pitch for your investors. Know what they are looking for and show them how investing in your business will get them closer to their goals.
5. Future Proofing Your Business
When planning for growth it is important to understand what synergies you can identify for your business that will allow you to diversify your business offerings.
“It is important to build complimentary revenue streams and also have a fall-back plan to mitigate any potential or actual risk” – Israel
Your core offerings are what your business is about, and growth will require that you find more ways to sell more. This may mean different sized offerings of the products and services you have, or different products and services that are adjacent or complimentary to increase what your customers are buying.
- More customers to buy – recruitment
- Customers to buy more of what you have – increased transaction sizes
- Customers to buy more often – frequency
While you may be able to achieve this with your current offerings, your role as the CEO of your business is to take your learning and knowledge and translate these into future opportunities for your business that move the business in line with its purpose and towards the goals you have set.
In summary, growth is the goal of every business however, sustainable growth takes planning and courage and the ability to mitigate future risk by balancing increased input costs and output benefits.
Much like the planning that you have to put into starting up your new business, you should be just as carefully planning for your growth to be successful.
Who Did We Talk To?
With his love for the law and business management, Tumelo’s experience spans many complex areas such as connectivity and sustainable technologies. He started his Strategy and Investment Execution business – Thebehali Investments in 2015 and he know what is means to grow your business from the ground up; his experience in turns helps other entrepreneurs achieve their success.
Israel L. Noko:
As the Founder & CEO of NPI Governance Consulting, Israel is passionate about the intentions behind Broad-Based Black Economic Empowerment, including the economic transformation of South Africa. Israel is also the founder of NPI Capital Partners, a private equity fund manager which manages a R500 million fund in partnership with RMB Corvest, and serves on various Boards to focus on Governance and Compliance.
Our sincere thanks to Tumelo and Israel for giving their time to us as we consider entrepreneurship and the opportunities facing the SME sector in South Africa.