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Imagine struggling all your life to build a business that you love and finally making it, only to go off the deep end because you can’t keep up with your own success. That would be tragic.
If life isn’t a race, doing business shouldn’t be one, either. While many companies are operating at a slower pace because of the current pandemic, some have experienced rapid development by meeting emerging needs. Under this scenario, planning ahead for business growth is essential to avoid becoming a victim of your own success further down the road.
Everyone wants their businesses to grow, but an entrepreneur needs to stay in control of any expansion to really benefit from the gains. To make it happen, business owners need to manage and balance three main stakeholders at all times: clients, investors and employees.
The good news is you don’t have to compromise your company values to do so!
Here are three ways cruise control can help businesspeople stay on top of their game, according to Tony Aksa, Associate Vice-President of Commercial Banking at the National Bank:
When you’re overwhelmed and fail to meet all of your customers’ needs, it’s a clear sign that your business growth is getting out of control. And you already know you don’t want to go down that road.
“Just like a car, if you drive really, really fast you might get there before everyone else, but you might also crash on your way. When you’re cruising along at a good speed, you’re in control,” says Aksa.
The same idea applies when it comes to doing business. Even if you’re driving a Bugatti Chiron Super Sport, you need to find the right pace to minimize risks, or in this case, provide high-quality service to your customers. It’s better to say no to potential new clients in a period of transition than to take on new business and end up getting a one-star review on Yelp or Google.
Aksa suggests planning ahead and reassessing your business model on a regular basis: “Plan, plan and plan again. I can’t say it enough: you want to avoid any situation where you short-change a client. You don’t want to be reactionary.”
That means quality customer service and satisfaction are even more important than the price you set for your services or the pool of clients you’ve retained. “The minute you deliver or over-deliver to a client, your business is succeeding,” he says.
To reiterate: It’s better to play steady and sensible than fast and furious.
“This is a major factor to never take for granted. You want your employees to have the capacity, energy and determination to respond to your demands. You don’t want to burn out your employees,” says Aksa. That’s something that could happen when a business owner puts too much pressure on their employees, especially in a period of growth. We’ve all had a boss at some point that drove us nuts — the kind that made us want to leave in the middle of our shift and never come back. Don’t be that boss.
“People don’t always realize that a business is only as good as its employees. Finding hardworking, dedicated and committed employees isn’t always easy and when you manage to find such employees, you’ll want to keep them by your side,” says Aksa. “Building a culture that respects and serves your employees is important, knowing that they’ll be willing to go that extra mile during periods of transition. It’s a two-way street.”
That could mean implementing benefits programs, a system of promotions and rewards, and diversity outreach, just to name a few.
Do you always need to increase your number of employees as your business grows? Aksa believes it all depends on the type of company you run.
If you’re in a people-intensive industry like retail, agribusiness, software or health, you’ll need to hire employees proportional to growth. Businesses on the manufacturing side will likely be more dependent on reliable, quality equipment to ensure speedy production capacity.
“Growth needs profitability.”
Duh! Profits provide a boost in working capital for growing businesses, but Aksa suggests to “find the right balance between having enough liquidity to operate and reinvesting money to grow your business. The keyword here is balance. Not retaining the profit the business generates and then ending up in a position of underfunding is a mistake.”
Banks and other lenders can help finance or refinance projects according to growth and profitability. They can usually see it from the pressure on cash flow or lack of capital investment, for instance. “Warning a business about the risks of growth is very important – and they appreciate the feedback,” he says.
Some entrepreneurs decide to use their own cash to purchase equipment or finance large-scale projects rather than getting help from the bank. That’s a big mistake! You really don’t want the bulk of the pressure weighing on your personal finances. It’s an (almost) certain way to go off the rails.
Instead, get informed about other organizations that finance companies, such as the Business Development Bank of Canada (BDC) or Investissement Québec. They can complement financing from the bank, as well as support the growth and working capital of businesses across the province and country.
With these three points in mind, it becomes clear that managing business growth comes down to having a strong business plan, along with tracking and analyzing expansion on a regular basis to adjust the enterprise as it grows.
“It will help you anticipate risk better, minimize damages and stay in control,” Aksa says. “As the saying goes: ‘When we fail to plan, we plan to fail.’ The best entrepreneurs are those who are always prepared should something go wrong, even if everything’s going great.”
Staying ahead of the curve will help you navigate through the challenges that emerge while your business experiences growth.
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