Businesswise | The right steps to growing your business
How do you grow a business from micro to small to medium to large? It's a question that may baffle the most revered and prominent CEOs in Jamaica today.
Years ago, I had the good fortune of being invited to a business mentoring dinner hosted by the PSOJ. It was meant to provide an opportunity for upcoming entrepreneurs to meet and receive advice from established business leaders.
Relishing the opportunity, I asked my mentor, William 'Billy' McConnell, for his advice on how to enter a new market.
Before he answered he proffered a proviso: "There's no single right answer. If you have the opportunity, ask as many business leaders as possible that same question and you will
get diverse experiences and recommendations."
It was good advice. He then went on to explain the complexity of entering new markets, and that knowing the market and having adequate product and capacity to deliver your services was crucial.
Since then, I've had the privilege of working alongside business moguls Audrey Hinchcliffe, Thalia Lyn and William Mahfood on The Innovators television series, who all stressed organisation and planning as critical to growth. Audrey shared that growth can be good and bad for a business, depending on a number of factors, such as proper financial forecasting and management, market demand, and internal capacity.
Thalia's advice to two young entrepreneurs who received mentorship from her on the show was to exercise patience and caution when expanding their business. She highlighted standardisation of processes
and procedures and having
them well documented as a prerequisite for growth.
William encouraged participants to do their research and explore partnerships where possible to expand their operations.
Much of the research done on businesses locally points to the fact that we have a very high rate of start-ups, an unacceptably high rate of business failure, and general lacklustre company growth within the MSME sector.
Most businesses that are started remain micro or small throughout their life cycle, and many close within five years of launch.
Interestingly, it's a similar situation in the United States where the majority of businesses are, and remain, small throughout their lifespan. However, in the US some industries classify a small business as one with up to 500 employees, whereas locally a large business is one that has over 50 employees. We classify a micro business as having up to five employees or annual receipts of up to $10 million. Small businesses are defined as having six to 20 employees or up to $50 million in annual receipts.
EXPLOITS AND OPPORTUNITIES
Growing is hard. The first step is seeking external opportunities.
You will need to know the local demand for your existing goods or services, and whether your industry is expected to expand or decline over the next several years. Are there opportunities in other territories; unmet customer needs that you can fulfil; and other areas or new business lines that you could explore? Can you merge with or buy an existing business?
Having identified multiple opportunities, you will then need to evaluate and rank them in order of feasibility.
The next step is a critical and objective review of your internal capacity with a view to preparing your micro or small business for growth.
This involves answering questions such as: Why do we want to grow? Are we delivering products and services at a high standard? Do we have the appropriate infrastructure and human resource capacity? Are our processes robust? Is the business model sound? Are there opportunities that will advance our company vision? Do we have the appropriate governance and leadership? Are we doing proper accounting? Do we have the necessary technology?
Those are just a few internal concerns that should occupy the mind of a business owner contemplating growth.
Having completed an initial external and internal review you can then analyse and document the gap between where your businesses is today and what areas need to be strengthened in order to take advantage of clear opportunities you have identified.
It is always better to validate the opportunities with further research and data and, if possible, seek expert assistance from a business development specialist or management accountant. Experts can also help you identify ways to finance and support your growth strategy.
Outlining clear objectives and a strategic plan are among the most important steps in growing your business, yet many entrepreneurs and business owners prefer to jump in head first with no clear plan to exploit speculative opportunities, which can have disastrous consequences.
Businesses are not created equal - some have potential to expand and others do not. In fact, not everyone has ambitions of growing their business to a large company, which is fine.
There's much pride to be had in operating a legitimate and sound micro or small business. For some, it may be better to run a small business than can endure through generations than to go bankrupt trying to expand before they are ready.
In the end, entrepreneurs have a right to decide what's best
for them and set their own standards of success.
n Yaneek Page is an entrepreneur and trainer, and executive producer of The Innovators TV series. Email: firstname.lastname@example.org Twitter: @yaneekpage Website: yaneekpage.com