Just as there is no single type of small business, there is no single strategy that applies to each. When it comes to growth, small businesses need to find an approach that fits their diverse place in the market. That being said, there are considerations that every small business owner should be aware of. The bottom line is this: Growth is good for small businesses, but the rate of growth should not exceed the ability to manage the business.
It's up to a small business to manage their growth at a rate that makes sense for the business and the individuals involved. Here are just a few considerations that should be taken into account when a small business starts to grow quickly.
First of all, it's becoming increasingly common
The vast majority of businesses in Australia are considered small businesses. In fact, the Australian Small Business and Family Enterprise Company Ombudsman notes that 9 in 10 Australian businesses are small businesses. These businesses account for 33 per cent of the country's GDP, employ over 40 per cent of the country's workforce, and pay about 12 per cent of the country's total tax revenue.
And the number of small businesses is growing all over the country, with Victoria leading the charge. In June 2018, the number of small businesses in Victoria reached 604,379, which was the highest number of small businesses recorded in history.
This type of activity demonstrates the growing interest in small businesses in the country and especially in the area. It also primes these businesses for growth, which is why small business owners need to manage their growth to the best of their ability.
Here are a few tips to do so:
1. Understand what is causing the growth
Is it the location? Is it the product? Is it the quick and responsive customer service? Growth indicates that something is being done right, but it might not be clear at first. Make sure you are taking a close look at the behaviours of your business model to find out what is working best, and keep it up. Knowing what is working well will help you avoid hiccups down the road.
2. Consistently measure your staffing needs
Business growth, especially quick business growth, can inspire the feeling that more people are needed to make sure operations continue to run smoothly. This is not necessarily the case. Measuring your staffing needs on an ongoing basis is crucial to understand which aspects can be flexible and which aspects are absolutely crucial to this growth. This also goes hand in hand with understanding the reason for the growth. For instance, if the growth is consistent and has been for a long time, and the staff is tiring, then the upward trend might indicate the need for a new person if the finances are available. If the growth is a series of spurts, that aren't necessarily consistent, then perhaps it's worth seeing how the field plays out a bit more before changing anything up too much.
3. Be mindful of technology
There is always a new device or system or app out there to make the life of a small business owner easier. Some business owners might think they simply need all these items in order to be successful. Be careful not to confuse growth with the latest and greatest technology. After all, business technology can be expensive. Don't think that your growth suddenly requires you to make the move to invest in more.
4. Keep an eye on cash flow
Business growth tends to mean more peace of mind for the business owner. Maybe debts are being paid more easily, or business needs are secure for a time being, but one thing is for sure: Additional cash flow means additional care when managing it. It's easy to become overly optimistic when additional money is coming through the door, but it's your job as the small business owner to keep a close eye on your finances first and foremost.
5. Keep planning ahead
Getting caught up in the moment during a period of growth can be a celebratory, as well as hectic, time for a small business. Planning for the future is the reason your business is growing quickly, but that doesn't mean the planning should end. There is no doubt that you will be busier during this time of growth, but making time to continue to focus on your outlook is crucial. The market is constantly evolving, and making sure your planning stays on course is the only way you can continue to adapt and be ready for what is coming next. After all, you have to plan for the next growth spurt.
6. Make sure roles stay defined
When growth happens, the business is going to have to keep up. This can be an energetic time for everyone, but it also means additional hours and efforts may need to be invested. If you have been careful to bring the right people aboard, then you might not run into much trouble asking employees to put in the extra time while the business adapts to the growth. However, this can also be a time when people might have to start wearing multiple hats in order to keep up. As the process goes on, make sure you are keeping the roles defined so employees don't become too overworked or the business model starts to lose focus. Make sure everyone knows who is responsible for what, and where the burden of each employee or department begins and ends.
Let us help
In an arena of diverse businesses, there are also diverse opportunities. Don't miss out on yours. Let us help your business stand out and succeed. There are many ins and outs to running a business, whether it is in a stage of growth or not. Let the specialists at WMC Accounting have a look at your business and see what we can do help increase your success.