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Some of these businesses are small, one-person affairs that are created to provide their owners with secondary streams of income. Growth for these businesses, many of which operate on a part-time basis, is not so important.
But for the vast majority of SMEs, expansion is an essential target. Many business owners, therefore, are keen to know how to turn a small operation into a big one. Although the disastrous disruption caused by COVID-19 has most likely put expansion plans on hold for many businesses, it’s always worth looking to the future for ways to improve in happier times. The place to start is by setting yourself a number of clear, defined goals to build towards. Goals will vary slightly from business to business, but let’s take a general look at goal setting as an aid to achieving business growth.
It is necessary to control business growth if it is to be successful in the long term. That means setting goals and planning how to reach them. Any goals you set yourself, however, should be achievable.
Successful entrepreneurs have to know their markets. They must be quick to recognise opportunities that spring up within them. Once spotted, prompt action is necessary to get in there before others. Make sure that the products you sell provide clear and definable benefits for consumers and that the business environment in which they are made, stocked and sold are employee-friendly.
It is hard to achieve growth if you only focus on one product – even if that product is an excellent one. Take Coca-Cola, for example. They started out just selling cola. Now, however, they are one of the largest corporations in the world. They have achieved this by expanding their product range to include things like fruit juices, sports drinks and even bottled water. It’s important, then, to maintain the flexibility to adapt to new markets, or take advantage of new, potentially lucrative streams of income.
The only thing you must bear in mind, though, is to ensure that you establish the success of your main product, before introducing more. Make sure your original brand is not diluted too much, either – evolution rather than revolution may be the best bet.
Once you have set your goals and your products or services are well established, the next stage for growth is to consider expanding your operation. This often requires the input of additional capital. For most people, this will require outside financing.
To get that financing, you will have to show your potential lenders a credible, profitable business plan and one key element of this, which some people do not pay enough attention to, is avoiding disruption.
Disruption can occur at any time, and arrive seemingly out of the blue. We’ve all recently seen the devastating impact that COVID-19 has had upon businesses across the world, for example, but everyday threats can be a great danger, too.
Flooding, for example, is an ever-present danger to many business operations across the world. We all saw the devastation brought by Hurricane Katrina – but even smaller-scale disruptions can still wipe out businesses (particularly smaller businesses with more fragile revenue streams).
Research from Direct Line, for example, shows that almost half of SMEs in the UK have experienced some form of serious disruption in the past five years, with claims increasing by approximately 14% per annum. Accidental damage, theft, and escape of water were the third most common reasons for insurance claims by these businesses, and the damage is often substantial. For the average SME, the average damage caused by disruption accounts for more than 40% of their average net profits. Businesses affected by such disruption also take, on average, five days before they are able to continue trading – and it’s often longer before they are able to return to full capacity. Without stable cash flow and capital reserves, many of these businesses would be in trouble.
Having a good business insurance policy in place is essential
With the threat of disruption in mind, it’s important to have the right business insurance in place before you consider growing your business further. Not only is this critical to any expansion plans you may have, it can also save your business from failing altogether in the face of severe disruption.
The road to becoming a big business is long, and it may seem impossible to ever get there. But, with the right strategies in place and the necessary precautions in mind, small businesses can certainly increase their chances of achieving sustainable and significant expansion.