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5 signs telling entrepreneurs they’re ready to grow their business
By ATB Financial 7 July 2020 7 min read
There comes a point where many business owners will start to ask themselves, “Is it time to grow my company, to take it to the next level?”
That next level could mean expanding product lineups, adding a second location, boosting staff numbers, venturing into new markets, and much more. What isn’t always apparent, is how to spot the signs indicating it’s time to grow the business.
Here are five ways growth-hacking tips to help you identify if your business is ready to make that important leap to scale, whether domestically or globally.
Are you cash flow positive?
If sales are soaring and expenses have been keeping steady, your profit margins may be looking healthy enough for you to consider broadening your business. By financially outgrowing your business, you and your team now have the opportunity to level up meaningfully.
Make sure you have a POS system with analytics baked into the software so it’ll be simple to track historic sales by month.
What can be trickier to gauge is revenue growth within the service industry. Kate McKenzie, manager at ATB, says services are often facing seasonality changes, forcing entrepreneurs to ask themselves if a bump in revenue is due to true success or just the arrival of the market’s high season.
McKenzie adds, “It’s often helpful for a service business to go through a cycle of a year to see the baseline to work from and have that data to determine what cash flow looked like over all the seasons. The key action step is to ask yourself, do you have a year of historic data on your financials? If not pull this information together so you can better forecast your growth.”
The funding factor
If you are approached by an investor who would like to help you grow your business you will want to consider whether you are ready to grow. Keep in mind that investors will want to see a return on their money so know that you have choices as to how you grow your business financially including bootstrapping and taking out a loan.
Both of these options do not require you to give up equity in your business. If you are considering an investor the most important question to ask yourself is, do my values and the values of my business align with this investor? If values do not align it is better to seek out other options as shareholders will want to see a return on their investment in some manner and will generally want that quickly, a misalignment of values can leave business feeling they have to reach targets that don't match their company's purpose.
“Have growth goals in mind,” McKenzie advises businesses securing outside funding. “If you just got series A funding, what kind of revenue projections do you have to hit that were promised to investors?”
She warns that companies accepting venture funds will feel added pressure to reach certain targets, which could weigh down the C-suite with more anxiety and challenges than what they already face.
Business strategy feeding off customer opinions
Many businesses take the time to be open to customer feedback. What is critical, though, is for entrepreneurs to not just hear what their audience is saying but truly listen.
Are they demanding a certain tweak to your product? Do they clamour for a new service you’re not offering now but could be made available to them down the road?
Looking for clues in data and analytics is helpful here, especially if your calls-to-action are attracting customers and conversion rates are spiking within certain web pages or units.
These days, customers may be huddling around the social media campfire to discuss the pros and cons of your brand, which means monitoring online feedback beyond your own site’s email inbox. But bring to those opinions a hefty dose of skepticism, just because a customer believes your company should do this or that doesn’t mean it has to be taken to heart.
Market demands could mean it’s time to expand
Sometimes, the industry you’re in could be telling you it’s time to bring something new to the landscape. As McKenzie notes: “If you see a unique gap in the market that you can fill, determine what the cost would be to create a minimum viable product (MVP) and test it out in the market right away. If it sells you may have an opportunity for growth.”
A shift in the market could be encouraging you to think creatively about a new solution, such as how a global pandemic forced many businesses to rethink how they bring their products or services to online audiences. Strengthening a weak or sideline aspect of your business is a sign of growth, even if you’re playing catch-up with some of your quicker-moving competitors.
We’re pretty certain Uber didn’t intend to be a food-delivery service when it first launched as a ride-sharing business. But when Uber execs scanned the delivery market beyond pizza, they saw an opportunity to expand in order to reach customers who may have never even needed a ride around town. What these customers wanted was food from their local favourite restaurant, and Uber Eats has now become the go-to food-delivery app for many Canadians.
Your business might not have the same market cap as Uber but your team could have the same open-minded approach to identifying a hot time to enter a market you may have otherwise neglected.
McKenzie says, “If all your eggs are in one basket, maybe it’s time to find another basket to fill with some eggs.”
No more space in your small business? If you build it, they will come
Are lineups snaking around your store’s block? Are your sales overwhelmed by in-person customers? If your business relies on bricks-and-mortar outlets, and one spot is attracting immense attention, that could be a sign to expand to another location.
This move is very cost intensive so it can’t be confirmed hastily. Getting all the right divisions on board to sort out the challenges and risk-reward scenarios is critical before deciding to open another physical location. But if it makes the most sense, and you foresee customers flocking to this new outlet, prep thoroughly and start working with your logistics and HR teams to get it up and running effectively.
Another question to ask yourself is whether or not you have an operations plan in place that allows you to delegate to others so both locations can run smoothly simultaneously. Also consider if you have documented all of your processes to ensure that your brand culture and values remain consistent at your new site.
If you don’t see any of the above signals inspiring you to scale your business right now, don’t be discouraged. Not every small business has to pull that trigger. Instead, try to remain flexible with how you steer your company into the future.
ATB’s McKenzie offers these options for businesses that may not be trending upward in a way that requires a major expansion.
- Grow your audience and market potential using social media.
- Grow your online sales using sales funnels, e-commerce strategies and working with third-party sellers such as Etsy, Shopify, and Amazon.
- Test your market by hosting a pop-up location as part of a community market or in collaboration with another business owner.
- Consider leasing a portion of another company’s retail space.
It’s your business, and the growth is personal
Business growth comes in many shapes, forms and approaches, don’t feel that just because something worked for another business to help them grow that it will be the best fit for you. What’s most important is to keep front and centre for yourself, why you want to grow and how your company values will guide that growth. If growth doesn’t naturally follow some of the strategies you try, don’t be discouraged, give it time and keep asking for feedback and looking for learning opportunities. The right growth solution and the right timing are often just around the corner.
If you’re looking for a deep dive on everything you need to know around how to grow your business, our ATB X Accelerator program might be just the place for you.
Reach out to one of our entrepreneur strategists to explore where you are with your business, where you want to be, and how to get there!