All businesses should be reaching for the next level of growth. Letting a business grow on its own without planning for the growth may result in stagnation or worse.
Many small businesses start without a lot of preplanning but with a lot of enthusiasm and a vision for a bright future. The businesses that are fortunate enough to reach a level of stability with a positive cash flow have to start thinking about where the business is going and how it’s going to get there. It’s no longer classified as a start-up; it has matured to where it has to plan for its next phase of growth. Perhaps the business reached its current level of success without a plan; it may have been carried on the shoulders of its founder. Like many new businesses that reach this point, it may have experienced rapid growth and there was no time for planning.
To reach the next level, planning becomes an essential part of the process. Building the next level cannot begin without a thorough examination of the existing foundation. I can use an analogy of a builder who wants to build a high rise on top of a single family home. A new floor cannot be put on top of the old house nor steel beams added to reach the desired height. The existing foundation has to be examined as well as the structure of the home. In most cases, the foundation is not strong enough to support the new structure, and the home may have to be demolished before construction starts on the new project.
In the case of a business, the foundation that has to be destroyed may be the one that the owner has been carrying. In the past, the owner wore most of the hats necessary for the successful operation, management and marketing of the business; the next level may require others to carry that load. This is typically the most difficult part in growing to the next level.
The following are the main building blocks for re-enforcing the foundation:
- Has management taken the time to develop a full strategic focus plan?
- Does it include:
- A re-enforcement of the company vision?
- An in- depth look at the strengths and weaknesses of the business and management team?
- Clearly defined objectives?
- A study of opportunities
- An analysis of risks and threats?
- Profit goals?
The following are also part of the overall planning process. A lot of components need to be studied and then combined to determine the feasibility of the direction chosen.
- What is the current financial position of the enterprise?
- Is it consistently producing a profit?
- Is the current customer base reliable enough to maintain the profitability of the company while it goes to the next level?
- What is the amount of funds available for the transition to the next level?
- What is the source of those funds (i.e. company reserves, personal investment, business loan)?
- Target market:
- Is the current target market the one that will carry the business to the next level?
- Is there a new target market that needs to be considered?
- What is the status of the competition for this target market?
- What new products/services have to be added?
- How much money has to be allocated for marketing to reach the next level?
- What new marketing techniques will have to be implemented?
- How large a staff is needed to succeed in a new marketing effort?
- Who will head up the marketing effort?
- What new hardware will the company need to grow?
- What new software is needed?
- Is the current work space large enough to handle growth for the next 2 to 3 years?
- Does it convey the image that the business wants to put forth?
- What additional staff will be needed to grow to the next level?
- Are there current staff members available to move into leadership positions?
- Systems and procedures:
- What new systems and procedures will have to be implemented (developed) to handle the additional growth?
- Where are the current bottle necks?
- Products and services:
- What new products and services have to be added to facilitate the growth?
- What is the availability of the products and services?
- What is the cost?
This process requires the use of a trained business coach to facilitate the plan development. Because of the many parts and the necessary research that is needed to solidify the plan, this process may take as long as two to three months.
The planning process will also lead to improvements that can be implemented (added) during the planning period to improve many aspects of the firm’s current operation.
All these parts have to be completed and brought together to determine the action items that need to be prioritized and the time frame for each step to be completed.
In business, success is usually measured by the bottom line, and progress reports tied into the time frame allocated for each of the steps has to be carefully monitored and checked against budget projections.
Accountability is the final step in reaching the next level. The owner and entire support team have to be held accountable for achieving the plan in the time allocated and within the budget.
Nick J. Petra CFP