If you’ve got to that stage where growing your business is suddenly becoming a distinct possibility, you’ve made a huge step. One of the first things we’re told as we research our business ideas is to prepare for a brutal first year. Particularly in the current climate, you will have done almightily well to bypass this.
However, this is just the beginning. The ‘growth’ stage is arguably even more dangerous, with the stakes rising by the day.
If you are someone who doesn’t fall into the above category, it’s time to assess when the right time might be to take the plunge. Today, we’ll look into some of the points you should consider.
Do you have sufficient cash flow to cope with the extra expenses?
Ask any entrepreneur what they think is the most challenging part of owning a business, and they’ll say the same thing. There’s no doubt that cash flow will be right up there. Even if you appear to have clients rolling in from every direction, it’s all for nothing if they are not paying on time.
Let’s not forget that this is a phase where your expenses will go through the roof. It might be the cost of materials, a higher rent to pay for larger facilities (and subsequently, all of the knock-on costs such as public liability insurance costs, utilities and so on) or even your workforce. Either way, your costs are increasing.
It’s at this point that you need to ensure that you have a robust system in place to ensure that you get paid on time and that you can cover all of your expenses. This might be a case of hiring a dedicated accounts receivable person or, if you’re a smaller operation, making sure that you have a system which chases up payments as soon as they are late.
Is your team up to the task?
If you’re growing, you will likely need to take on more staff. More staff means more overheads, but, more crucially, it also means that you need a cohesive team that will work together to make your business successful.
Do you currently have the right team in place? If not, is it worth waiting until you do? This is a difficult one to answer as it depends on the specific circumstances of your business, but, as a general rule, it’s probably best to err on the side of caution.
Do you have a solid plan in place?
This might seem like an obvious one, but, believe it or not, a lot of businesses try to grow without a solid plan in place. This is a recipe for disaster.
If you’re serious about growing your business, you need to have a plan. This plan needs to be watertight and consider all potential risks and pitfalls you might encounter along the way.
Are you going after new markets? If so, how will you do this? Are you launching in a new region? If this is you, do you have a team that understands that market, and if not, how will you get around that?
The key to creating a solid plan is questioning it at every eventuality. While your business might be on the right path now, you are entering a period of the unknown where the risks will be higher than anything you’ve experienced in your past years of trading.