Business growth can be hugely exciting, but it does bring changes within the business. This section looks at the importance of your Business Plan and also at the implications of growing a business.
2. Planning for growth
Savvy small business owners know that a business plan is a great tool not just to help guide and grow the business, but also to use as a reference to continually check where you are and what you have achieved.
Your business plan provides the big picture, that is, the long term, big goals you have for the business, and also the detailed step-by-step plans for how you intend to achieve those goals.
Your business plan is essential if you are seeking external funding or support from external partners. It shows that you have a clear understanding of all aspects of your business and demonstrates your commitment to future development.
An overview of a business plan is provided in the 'Making a plan' guide.
Analysing your business
Assessing your current performance is the first step in putting plans for growth in place.
How is the business performing? In which areas are you doing well?
Which areas are not performing so well? How do you compare against the competition?
It can be useful to take stock of your resources. What finance do you have available? How many people support your business and are they sufficiently skilled? Do you have a reliable supply chain? Do you have sufficient space to expand?
What about intangible resources such as your brand, design capability or patents? How can they contribute to your growth plans?
Ask yourself if there is anything holding you back? What are the biggest challenges you expect to face?
Anticipating and addressing these issues before you put your growth plans in place, will ease the journey and make growing easier to manage.
Use this growth implications for my business template (MS Word 11kb) to help you identify which areas are most likely to be affected by your growth plans.
3. Implications for the business owner
As the business grows, your role as the business owner changes. This is not always easy. You are likely to have spent a great deal of time and effort building the business. You’ve probably been involved in every aspect of the day-to- day running and know everything there is to know about the business. Now as you move ahead, your role is going to be very different and instead of working IN the business, you have to step back and work ON the business.
Working ON the business
Working on the business means spending time growing and managing the business, not actually doing it. This means building a team around you and delegating the technical and hands-on things to them. It means creating systems that allow others to do those things in the way, and to the standard, that you want them done.
It also means giving up control of certain aspects and letting others take responsibility in the business. It means focusing on the bigger picture, managing people, securing finance, driving marketing and sales, and making new and influential connections.
A big challenge for the business owner
This can be a big challenge for many business owners. You are likely to be moving out of your comfort zone and getting involved in new and different areas in which you have little or no skills or experience. You have to stop doing what you love doing – and watch someone else take over your original tasks. You may question if anyone else can have the same commitment to the business as you.
You are concerned about giving up your 'baby' – but like any parent you have to equip your offspring with the right tools and beliefs and step back to give them space to grow.
Building a support network
Another issue is that business owners can feel isolated with no one to talk to about business issues and problems. Being part of a business support network can help. These forums offer an opportunity to meet likeminded business people to get the latest news, to discuss issues and to share ideas. It can also be useful to have a business mentor, someone you trust and respect who can listen and provide you with advice and guidance.
4. Implications for the business
Growing has an impact across all aspects of your business. Here are some of the key areas to consider:
Building and managing a team
Very few business owners have all the skills needed to effectively run a growing business, particularly as the issues become more complex. Before rushing into a major recruitment drive, look at the skills and experience you already have in the business and identify those that you need to take the business forward – now what are the gaps and ask yourself how best you can fill them.
Remember employing full time staff is only one option, there are many others. The Building a Team section takes you through the details of recruiting employees and building a team.
Creating systems and procedures
Writing down the way you do things and providing step-by-step guidance in a systems and procedures manual is one of the most valuable tasks you can undertake. This is very often where the ‘secret ingredient’ for your business can be found – your products and services may not be unique, but how you do things could be what makes the difference.
As the number of people involved expands, it becomes even more important that things are done in a consistent way that maintains the quality.
Property and equipment issues
Having enough space to accommodate your growth plans is critical. Where are the new members of staff going to sit? Is there a desk, a telephone line, a computer, an internet connection for them? Is there space to open a new production line? What is the footprint and weight of the new machine? Have you got room and the facilities to store additional raw materials – what about finished stock, where can that go?
These are all very practical, but essential, considerations that must be addressed during the planning stage.
Look too at the conditions of your current lease or property agreement. How long does your current lease run? Can you do what you want to do and does it allow for expansion?
There may be restrictive clauses that could potentially curtail certain activities, so be sure to check out the details.
If you are looking for new premises, find out about the grants available in different areas. Your Business ales business adviser can direct you to specialists covering this subject.
Sourcing and supply chain
Growth means you are likely to be significantly increasing production. Are you in a position to source all the materials required for the anticipated level of production?
You may find that some of your current suppliers are not able to step up to the new levels of production and you need to find new suppliers. It is always wise to have at least one alternative supplier on critical materials – and also to know where there are alternative sources for everything you need.
What about the relationships you have with everyone in your supply chain? Do you know how they are likely to react and what support they can give you if you need to increase or reduce your new estimates?
Building positive relationships across your supply chain is one of the key tasks for the business owner, particularly during times of growth.
As the business grows, it is likely that there are many more people involved, both within the business as well as externally. You need to be in regular contact with employees, customers, suppliers, funders, investors and shareholders – and what you say and how you say it (communication methods used) need to be tailored to each specific group.
Providing information, giving instructions and giving and receiving reports in a timely and efficient way ensure the smooth running of the business. But time spent on personal interaction and developing relationships should not be underestimated. Again this is a key area for the business owner to be involved in.
Use all the tools at your disposal - from email, text or SMS, telephone and face-to-face meetings. The internet has opened up many new opportunities for communication, sharing and collaboration. Get advice to find out what tools and techniques can be of use to your business, and which are used by those you are communicating with.
Administration and record keeping
The larger the business, the higher the likelihood of increased bureaucracy and red tape. As well as legal and regulatory requirements, the paperwork associated with more employees, increased production and more complex business operations is likely to increase.
Using the appropriate technology, including taking advantage of online filing, can be effective in helping to manage the administrative burden.
It can be a good idea to delegate the day-to-day administrative responsibility to a reliable individual or team in the business. This releases you, as the business owner, to manage the top-line activity and ensure that critical deadlines are adhered to.
Tax and financial obligations
Increased turnover, new markets (including export markets) and more complex funding arrangements all have an impact on the tax and financial obligations for your business.
There are likely to be many new ‘dos and don’ts’, as well as financial reporting arrangements and payment deadlines – for example, when and where VAT is charged, or if you are dealing with customers outside the UK, how transfer pricing affects your business. These are important and significant aspects for your business.
Always get professional advice to make sure you meet all your tax and financial obligations. Your accountant is well placed to advise you on what the implications are for your business.
Full information is available on the GOV.UK website and your Business Wales business adviser can direct you to appropriate specialists for further support.
Corporate governance is the system by which companies are directed and controlled and ensures that companies operate in a fair, equitable and appropriate manner.
Transparency and accountability are the most important elements of good corporate governance. Make sure you are aware of your responsibilities in this area. Corporate governance is covered in greater detail in the Building a Team section.