In the first financial year, founders usually have fewer world-shaping plans: to keep it going, get rid of the debts as quickly as possible, and keep the business alive. Once the revenue streams have been established, owners can start working on growing the company: either by opening another branch, expanding to new markets, or broadening the service portfolio. How can you develop a growth strategy? Why is it important to have it in the first place? Our professionals have all the answers you need.
The importance of growth
If a business wants to survive and succeed in the long run, growth is essential. When a company grows, it means that new services and products are introduced, as well as new talent can be attracted, improving profits and overall performance. All of these positive changes put a business in a better position: new and more customers will come enhancing sales and increases stability. Making your brand known is a vital factor, as this is the first step to dominate a market and reduce the threat of competition. To achieve all this, you need customized business growth strategies that work.
Developing new business strategies
A business strategy is a plan that proposes how a company will achieve its goals. This document contains important guidelines that, if followed, will take the business to the next level. To start the process, it is necessary to check if your business is prepared for the expansion you are planning.
To find what is the right growth strategy for your company, you need to know exactly how it is performing. Understanding the weaknesses is helpful so you can apply growth tactics to counter their effects. Studying others’ growth strategy examples is the first step to understand what option you have to cope with challenges. The best entrepreneur strategies include a vision, assuring that employees will not lose sight of the company’s values and mission, and a thorough risk assessment to prepare for potential issues of the future.
The foundation for a realistic and successful business plan
In the case of small companies, there are growth options that can be followed. We list a few of them below, but before you make a final decision, it is advisable to get your books checked with one of our Chief Financial Officers.
- Forecast your sales: Planning sales activities enables you to forecast sales for the first financial year. It will help not just in your financial, but in your marketing strategy too, as you will know how to prepare for seasonality in sold products or services. You will be able to allocate resources and time more efficiently, and with it, counter less productive periods.
- Know your expenses: Understanding your expenses will allow you to plan for the coming months and years. While some expenses may be unexpected, a CFO will ensure that you have the budget to cover them. These can be a fire, a broken heating system, or an increased tax rate.
- Get to know your break-even. Break-even analysis is essential if you want to know the stage of your company or when a product starts to make a profit. Understanding it will allow you to create a suitable pricing strategy that supports growth in the early years. Discounting, coupon codes, offering certain products or services together in a bundle are all viable options you can choose to boost customer acquisition.
- Operational needs. It is important to know how many employees and what types of roles are necessary to run your business. While there are great examples out there, you might need to set up a completely different organization to be successful in your market. Many founders fail due to putting too much workload on themselves and forgetting to delegate tasks to others. A balanced workload protects you and your employees from burnout while building a growth-ready organization.
- Create a cash flow plan: it is advisable to also engage a temporary or virtual Chief Financial Officer as they will realistically map all the financial activities of the planned period. Their expertise will help you understand the budget to income ratio, when to request additional funds, and when to hire additional talent to grow the organization.
- Separate your accounts. If you are starting a new business, make sure you have a separate bank account for it. This is extremely important because if your personal and business administration is mixed, it becomes exponentially more difficult to understand it in the future. If you want to apply for a loan, you will need to share your financial documents with the bank, but if it’s not kept organized and correctly, they won’t even consider working with you.
Long term growth
The professional experience of a CFO could be required to shape your budget to save for long-term growth plans.
– Try to increase your sales utilizing different marketing methods.
– Take it one step at a time. Don’t think of something big first, but tiny steps. While an IPO is a great aspiration, starting with preparing for an M&A deal or selling company shares on the floor does not serve your business’s growth interest.
– Never forget your relationships. Growth occurs by word of mouth, and every member of a community contributes to that growth.
– Always make sure that your company offers a great experience not only for customers but also for employees and yourself. Customers feel the vibe of your business and the people who work there.
– Plan before you act! Never hire someone out of the blue: Research the company or person before you hire them. Know the CFO’s responsibilities clearly and ensure that the person you hire is equipped with all the skills needed.
– The role of a CFO is much more than simply looking over your books and allocating your budget, but it can also help you develop a long-term CFO strategy to ensure that you can afford your plans as well.
Growing your business is the result of your hard and dedicated work, so do not feel sorry for the money you spend on professional help. All the investment will pay out when new customers find you, which leads you to new products and new shops. Check out our website, or give us a call if you would like to learn more about how a virtual CFO can help you grow your business.