Preparing your business for its next stage of growth
Growth can mean more customers, a larger team, a new location or an acquisition. Each brings a different set of commitments. Before pursuing the next opportunity, it helps to establish what you want the business to become and whether its finances and operations can support that change.
Define what growth is meant to achieve
Begin with the owners’ objectives. Are you aiming for stronger profits, a business that relies less on one person, access to a new market or a future succession? An increase in turnover can be useful, but it is not a complete objective on its own.
Describe the proposed change clearly. Expanding an existing service is different from buying another business or launching an unfamiliar product. Identify what will be different about the way you win work, deliver it and get paid.
MBall’s corporate strategy support covers growth and wider owner and shareholder planning. Bringing those questions into the discussion early helps you assess an opportunity against the direction you actually want to take.
Establish your financial starting point
Use up-to-date accounts to understand current margins, cash commitments, borrowing and the working capital already needed to run the business. If the underlying records are incomplete, address the gaps before building an ambitious forecast on top of them.
Identify which activities generate a dependable contribution and which depend on a particular customer, employee or supplier. A concentrated source of income may need a different plan from a broad, recurring customer base.
Write down the assumptions behind projected sales and costs. Distinguish agreed work from potential enquiries, and show when recruitment, equipment or premises costs would begin. A forecast should make those assumptions visible enough to discuss.
Check the capacity to deliver
Consider what would happen if the additional work arrived tomorrow. More orders may require supervision, training, purchasing, customer support or administrative capacity as well as people doing the core work.
- Identify the process most likely to become a bottleneck
- Confirm which responsibilities need a named owner
- Review whether your systems can handle more transactions
- Allow time for recruitment, training and handovers
- Decide how you will maintain quality during the change
Speak to the people who manage delivery. Their practical knowledge can reveal dependencies that a sales forecast misses, such as specialist equipment, long supplier lead times or work that only one person currently understands.
Match commitments to a workable plan
Prepare a cash forecast that shows the investment required before new income is collected. Set out what happens if sales develop more slowly than expected or a significant customer pays late. Review financing options against the purpose, repayment demands and risks of the proposed change.
Build the plan in stages where possible. Agree what evidence would justify the next commitment, such as consistent demand, an acceptable margin or the successful completion of a smaller rollout. Also define the circumstances in which you would pause.
Set review dates and compare actual performance with the assumptions. Growth planning should remain a working discussion as you learn, rather than becoming a document that is put away once an investment decision is made.
If you are considering your business’s next stage, send MBall an enquiry using the form alongside this article to start a conversation about your objectives and options.
