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Business growth is all good and well, but it needs to have some longevity for it to be successful. There is little point growing at a rapid rate and then burning out and folding. It’s about future planning and achieving sustainable business growth and for that you need a good business plan. Here we look at the importance of sustainable business growth and the steps that are required to achieve this.
Sustainability is the ability to maintain at a certain level. When looking at this in the context of business growth, this means being able to grow without having to increase its financial leverage of debt accumulation. In short, it’s the stability to be able to expand using the revenue it generates and not funding or investment. This means being profitable.
For a business to be profitable, they need to have met the breakeven point. That’s the point at which its costs are met and effectively covered. Any revenue generated beyond that becomes profit.
When businesses become profitable, it’s tempting for them to spend this on big expansion plans. Of course if you expand, your expenditure increases and your breakeven point is then higher. A good business plan will ensure that the breakeven point is always met and profit grows steadily above this to achieve sustainable business growth.
Sustainable business growth is paramount to any enterprise. Companies who do not successfully manage to sustain their growth will risk folding, accruing escalating debts or stagnating. Stagnating really just means sustaining the business but never growing. This is fine if you don’t wish to make your business any bigger.
Growth for most, however, is the optimum goal – even if it’s on a relatively small scale, growth increases our company’s net worth. It can also mean more market share. Sustainable business growth can attract things like investors, partnerships or buyers which can in turn provide a high level of business success or financial reward.
The key, when looking at business growth, is to make sure your income is always higher than your costs.
To maximise business growth, there are some key steps to follow:
1. Put solid foundations in place
Proper planning prevents poor performance. Having a smart business plan that is realistic and achievable is the most important step in achieving sustainable business growth. Do your research on costs and forecast your sales, so you can understand how well you can scale your business. Keep referring back to it in your business plan. This should be your road map for future direction.
2. Decide on the type of business you want
Your business plan should be clear about the markets you are trying to attract that will guarantee the best revenue. You might be looking at high volume sales of low value from a specific demographic, or lower volume sales with a higher value from more affluent groups. Using insights and experience, define the best ways to achieve sustainable growth through selling to the right people.
3. Work on customer retention
Many businesses have too much focus on new business and neglect existing or previous customers. Customer retention actually presents a huge opportunity for growth. The key is in doing a great job and maximising customer satisfaction, so that they come back. Consider perhaps a reward scheme to incentivise loyalty from your customers.
4. Recruit the right people
Your staff members are the face of your business and they can make or break your operation. Staff should be aware of your company objectives and growth expectations and understand their role in contributing to growth. They should feel valued and be adequately rewarded. If you look after your staff they will look after your customers – thank you, Richard Branson.
5. Embrace change
If you do what you have always done, you will get what you have always got. Sometimes you need to take a risk to find success. If existing avenues aren’t fruitful then change tact and embrace new opportunities. This may be adapting to meet the demands of a new and emerging market or it could be a new technology that revolutionises your industry. Be open to change.
6. Be open to partnerships
Many hands make light work. Partnerships may mean having to share some of the company profit, but if you partner with an organisation that has the skills you lack, you can create a powerful engine built on great teamwork and expertise and achieve better growth.
7. Plan for the worst
Take the rough with the smooth. No business is bullet proof from external factors like economic pressures from recession or changes to industry. The key with a good business plan is to ensure it factors in sustainability when times and both good and bad.
Achieving sustainable growth might have its challenges, but if you have a business plan that is robust and realistic and you are willing to be flexible and open-minded, you can maximise growth without compromising stability.
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