If you’re looking to grow your business, that's a sign that you’re in a great place. Congratulations, that’s already a huge win.
While it’s an exciting time for you, it means new challenges when you are just starting to get the hang of being a small business owner. How do you manage rapid business growth properly, so you don’t get overwhelmed?
To succeed, you’ll need to understand what to expect and what steps will take you to the next level — successfully. Here are some tips and advice for business growth strategies.
Are you prepared for your small business’s growth?
Knowing how to grow your startup isn't always straightforward. With additional employees or more products and services, maintaining a high level of customer service and operational success becomes a little harder.
Beyond service and operations, you’ll want to keep these business development factors in mind.
Changes in your working capital
New business growth requires additional cash flow to ensure you can sustain the growth in operations or demand.
Because it may take a while to start seeing the profits from your expansion, you may need to take out a financing loan to help supplement your new business model. With many loan options available, look for an option with the right amount and terms to fit your business needs.
Potentially different taxes
You’ll need to keep the IRS in mind as you grow. Of course, more taxes shouldn’t be a reason to deter you.
You just need to be aware that there are different taxes for businesses, income levels and sizes. It’s worth consulting with an accountant or tax expert to ensure you’re on the right track.
Different insurance needs
You will also need to adjust your small business insurance policy to meet your growing business. This means making sure you have the right amount of general liability insurance and looking into other policies you might need.
For instance, if you’ve been working alone but are hiring an employee, you may now be required to carry workers’ compensation coverage.
Or, maybe you’re moving to an office space or relocating to a bigger location. Commercial property insurance can protect all the physical items you need to operate your business, including inventory, business equipment and furniture and the brick-and-mortar structure.
Managing your small business growth
Businesses can sometimes grow too fast. It may seem like a good problem to have, but you can easily become overwhelmed by how quickly your business scales. Think of it this way: if you suddenly gained 100 customers overnight, how would you handle it? Would you still be able to offer the same level of service and customer experience? Or would you have dissatisfied clients who complain about how it’s tough to reach you or how your billing is disorganized?
Your company’s growth requires proactive planning to ensure its success. This helps ensure that you're still in control even when you're in the exhilarating boom period. Here are some steps to help you.
1. Review your goals and business objectives
Things move fast when you’re an entrepreneur, and you sometimes find yourself having to make decisions quickly. However, it’s better to be strategic about your growth rather than diving into the deep end and trying to stay afloat.
If you created a business plan when you first started, now is a great time to take it out. What were your goals back then? Did you achieve them, or will you modify your goals based on new information? Are you still happy with the direction your business is moving in?
Look at your current state of business and ask yourself some basic questions such as:
- Why do I want to grow my business?
- Am I expanding too quickly?
- Is now the right time to hire help? How will hiring an employee help and hinder my business?
- Is this the right time to offer this new product or service? Are my customers asking for it, or is there market demand?
- Am I operating efficiently? What could be improved, or where can I save money?
Based on your answers, you may want to create a strategic plan to help you define a strategy and allocate funding or resources to achieve your goals. Your strategy should consider your resources, market and customer demographics, competitors, and marketing or distribution.
2. Analyze your finances and cash flow
Small business growth can be hard on your bottom line. Some of the new costs will be long-term, like an expanded workforce with more salaries, or the higher rent you’ll pay for bigger offices. Other short-term costs are one-time expenses, like new equipment for a new carpenter.
First, it’s smart to create a new budget plan and reallocate money where you need it. It’s also important to stay on top of your business’s finances by forecasting profits and sales and setting financial benchmarks so you can make better decisions.
Also, managing your working capital — and consequently, business growth — also includes being vigilant about controlling your costs and debt. Keeping debt under control signals to investors that you are a viable client they can finance comfortably.
TIP: If you already have taken out a loan, check with your lender on refinancing. It can help spread your payment over a longer period or help reduce your monthly payments.
3. Prepare for operational growth
A good growth strategy begins with understanding what’s ahead. Your day-to-day activities, your budget, and workforce, are about to change. Here are a few things to keep in mind when you:
Find new employees
There are only so many hours in a day, and you can’t fit in every new job. That means, if you want to take on more work, you’re going to need to hire more employees.
And that, in turn, means searching. But where? At a local trade school, poached from a competitor, word-of-mouth or via LinkedIn?
Where you’ll find new workers depends on the type of business you’re running and what level of expertise you’re looking for. For example, suppose you just need someone to mow lawns. You can easily find them at a local community center from a bulletin posting. A certified electrician, however, will need to be more carefully vetted.
Train new workers
Once you hire new workers, you’ll need to train them. The level of training also depends on the type of work.
If you’re running a daycare, this can be a short chat followed by on-the-job training as you work together on a couple of shifts. If you're running a carpet cleaning business, you may want to have a short manual prepared to detail customer interactions and how employees should do each job.
Rent a bigger space
Part of growing a small business is often growing your actual space.
For instance, if you’re a yoga instructor with a home studio, you will likely need to find a new, bigger yoga space to accommodate more teachers and larger classes.
But this also means changes in your operations. You may need to get more equipment, develop new schedules, establish security procedures, prep your new space and staff and more.
More workers, more new customers and more work often mean more equipment needed.
So while a new photographer will likely bring their own camera to jobs, you’ll likely need to provide them with specialized lenses, backgrounds, photo editing software and printing facilities.
4. Market your growing business
Let people know that you’re growing! Tell them if you moved to a commercial space, are offering new products or services or are expanding where you offer services.
While inexpensive small business marketing tips can come in handy, you may need to invest more at this point. You might think about hiring an external marketing person or adding someone part-time in-house.
This may lead to a higher advertising budget and public relations, but these should be seen as a good investment. And remember, a key to marketing is consistency; you don’t need to blow your yearly marketing budget on one ad spot.
How NEXT helps protect your small business growth
NEXT can help protect the successful business you’ve spent your time and efforts growing. We create customized business insurance packages at affordable prices so you can get the right amount of coverage you need at any stage of your business.
Our streamlined online application allows you to see coverage options, pricing and purchase policies — all in less than 10 minutes. As soon as your purchase is complete, you can access your certificate of insurance online.
If you have questions, our licensed, U.S.-based insurance professionals can help.