October 29, 2019
In this blog series, we aim to help you unlock unrealized value in your business and go beyond what your business is today. There are always new methods to build value in your business, and given adequate time you can execute a plan to realize it. This second blog installment seeks to unlock hidden features in your Growth and Scalability potential.
Purchasers typically pay the most for businesses with the highest growth rate and potential to grow. In rare cases, an acquiring company may buy a business that scores high on growth potential but low on other attributes. This acquirer may see a way to leverage some of the assets to help the company grow more quickly than it could under its current owner.
Factor #2 Growth and Scalability
What is this, and how does it affect me?
A scalable business is one that can significantly increase its sales, while costs stay flat, allowing for higher levels of profit over time. This type of business can withstand pressure as a result of growth without being hampered by its resources or structure. Small businesses must be particularly conscious of scalability because they have the most significant growth potential and need to maximize the return with manageable resources. Businesses can grow without scalability, but they won’t achieve the increased profit margins of nonlinear growth models.
In the event your company suffers from a lack of scalability, or you’re not prepared to grow at this time, there are things you can do to set yourself up for future scalable growth and success. But how do you make these changes?
Here are a few areas we feel you should focus your attention on;
People, Systems & Customers.
The People Factor
Without the right staff, your business will fall into a rut. Individuals lacking passion, strength, and the ability to be agile will only hold you down. This is especially true for small businesses, where staff aren’t numbers, but critical members of the team. Remember, growing your employees is a part of successful business growth.
Evaluate all the people around you; employees, suppliers, partners, advisors, etc. You’ll know there is an issue when you look at these business relationships, and you don’t like what you see. It may even make you feel unhappy. On the flip side, you will get the opportunity to see the individuals who truly shine. These are the people who make your business flourish, allow you to be away on holidays without worrying, and interact well with fellow staff and clients. Keep these superstars happy and at your side.
When you go to build a team, don’t look for people who are just like you. Look for people who are different from you and are better than you at various aspects of the business. A diversified team will help you scale your business quickly because of the differences in skills and perspectives. Now that you have your dream team, it’s essential to keep them happy. According to LinkedIn, the No. 1 reason people change jobs is because of a career opportunity. Continue to educate them so they can expand their knowledge and skills with you, set goals together, and importantly, commit to regular follow up and feedback.
Your Business Systems
Establishing an infrastructure that can handle growth is crucial. If you want to grow your business, you need a stable process. Not only do you need a process, but you need to have it documented. Have systems that are integrated and don’t require manual data manipulation and maintenance of data across different systems. In other words, make things simple and ensure they flow smoothly. Although many areas in a business are scalable, some are not. So, you should consider these with the same serious thoroughness as you do with your scalable points.
Review your current systems to see what aspects are repetitive and make it your ultimate goal to automate them as much possible. Instead of relying solely on staff to handle things like scheduling or data entry, invest in software that lightens employee loads and allows the workflow to be more efficient. New software systems will be an upfront cost, but as the business expands, that software can minimize new hires, keeping expenses down over the long term — even as profits increase.
The scalability of a business depends on effective communication, whether internally to your staff or externally to clients and investors. Don’t forget to get feedback from the people who are performing the tasks and processes you want to change. Chances are, they’re eager to participate and sometimes the best solution comes from the individuals who are most involved in what needs to be improved. Plus, people tend to accept change better when they are part of the development. So never forget to stop and listen, it will often save you extra steps.
What sets you apart from your competitors?
To scale your business, you need to fully recognize what makes you better in the eyes of your customers. Having a good product is just not good enough any longer. When markets are flooded with similar products, being prompt, friendly and accurate with your customer service can boost your likelihood of earning a customer. To keep them loyal, however, you need to keep up with the excellent customer service and products that brought them to you in the first place.
Customer retention is a term that describes a company’s ability to retain its customers over a period of time. Done correctly, an established customer retention strategy can help you; drive repeat purchases, increase your network of brand advocates and boost customer lifetime loyalty. Many respected research houses have all produced research showing that retaining a customer is easier and more profitable than going out and finding a new one. So, you’ll likely see more financial gains from nurturing those existing relationships and the more you please your customers, the more they’re willing to help promote your brand to their peers. This brings in new customers without all the marketing expenses.
Your customer retention strategy should start with customer service. Your employees are the initial point of contact with your customers and throughout their customer journey. Ensuring your employees are content and engaged will make them have an emotional commitment to your business, and consequently, more likely to be your best brand advocates. The positivity of a committed employee will permeate throughout their communications with customers, making it a brilliantly simple customer experience strategy.
There will be challenges your business will face in its journey towards the kind of growth you wish to achieve. Remember to be patient. Nothing truly amazing was built overnight. Slow and steady growth is almost always the better option. It’s reliable – and also more conducive to scalability.