Entrepreneurs often miss out on business opportunities that could ensure the growth and sustainability of their business. Which ones are worth seizing and how do you get started? Chantal Durocher, Business Development Manager for Desjardins Business, presents the key factors for handling growth.
There are many ways to plan your growth strategy
The impact of growth extends far beyond finances. All aspects of the business—including human capital, real estate and other assets—also grow and become more complex. To meet the increase in demand or simply to strengthen your position against the competition, growth planning and management is a fundamental step in a company’s development.
1. Know your business
Before aiming for growth, you need some stability. This includes reliable supply, sufficient staff, efficient production and the ability to deliver products and services on time. Addressing problematic issues prevents growth from worsening them. You can subcontract, invest in equipment or add shifts as needed.
We then assess growth potential based on existing resources. To sell more products or services, you need more raw materials and time. Is it possible to get enough of what you need on time and without compromising quality? More people and inventory need more space. Can you make better use of your current space or would a move be in order?
2. Monitor the market and its outlook
What is your company’s position in the market? What about your competitors? These observations help identify opportunities. For example, 3 specialized manufacturers win equal shares of issued tenders. If 2 of them merge, they end up in a dominant position vis-à-vis the third.
We can learn a lot from industry leaders, but great innovations are sometimes hidden elsewhere. We can get inspired by a completely different field to automate a process that no one has thought of.
If there are 2 things that distinguish successful entrepreneurs in their growth, it’s staying tuned to the economic outlook and social movements. Keeping up with current events and anticipating trends helps you make informed decisions to plan your company’s growth.
3. Secure financing
Rapid growth can put a lot of pressure on cash flow: suppliers to pay, new hires, additional investments, delays in receiving payment and more. The right moment to discuss your growth plans with your financial institution is not when you’re short of money in the middle of a contract, but rather beforehand, when you’re considering submitting a quote! Having credit agreements in place allows a company to react with confidence when the right opportunity arises.
4. Analyze opportunities and their impact
There are many strategies that drive growth: acquiring a competitor or partner, developing new products or services, and expanding to foreign markets, among others. However, no company has unlimited funds, so you have to prioritize according to your means and your financial partners. Do your due diligence and analyze each opportunity and its possible consequences from different perspectives:
- Is it a long-term opportunity or a quick cash grab?
- Does it allow you to increase your market share?
- Does it make economies of scale possible?
- Do you have the human and financial resources, supplies and equipment to meet this commitment? If not, what is the strategy for obtaining them?
- When will you achieve profitability? Do you have the financial capacity or do you need an investor’s support?
- What are the risks?
5. Seize strategic opportunities
Strategic opportunities are those that strengthen the company’s position and line up with its objectives. These are the ones to prioritize! For example, by acquiring a supplier, a company could reduce its supply dependency, gain greater control over production, increase its profitability and gain a competitive advantage. Conversely, non-strategic opportunities often present pitfalls:
- Employees may have a hard time explaining the company’s choices and no longer recognize the vision they had embraced
- Buying a company whose products have been recalled or have a negative image can tarnish the company’s reputation
- Resources invested in a non-strategic opportunity are no longer available to seize others that are a better fit for the company’s objectives
Ability to manage the growth rate
Companies with strong growth potential aren’t just in technology. First, they are organizations whose founders and managers are visionaries who anticipate or create needs for consumers and businesses. When you offer something that makes life easier for people or you help them solve a problem or spend more quality time with their loved ones, the potential is there. However, you must have the means to achieve your goals, and too fast a pace can trap the company. The greatest danger of sudden growth is not being able to meet commitments and deliver the goods.
To create the conditions for success, it’s best to know your strengths, hire people with complementary expertise and be well surrounded by trusted professionals who are used to carrying out transactions or supporting entrepreneurs with their growth projects. This planning allows you to compare different potential scenarios and then prioritize them. “Don’t wait to discuss your goals and ambitions with your account manager to benefit from their experience and support with your growth plans,” suggests Chantal Durocher.