This sounds like the kind of problem you’d want to have – hitting growth targets and achieving enough new customers. But sometimes when businesses reach this point, they become so busy focusing on those customers that they forget about the need to continue to drive new business.
If you’ve hit all your targets, don’t get too conformable and stop chasing leads unless you want to plateau your growth, says Gavin Johns, Partner at DFK Hirn Newey.
If your business is struggling to grow, this might be a contributing factor. But what else is at play? Is it a lack of prioritising marketing, fluctuating industry trends or something more?
Cash flow planning
“Businesses don’t always manage their cash flow well, which impedes on their ability to grow if you don’t have funding,” says Johns. Securing the capital you need to grow your business is dependent on your ability to win support for your business trajectory, which means being able to present compelling ideas accompanied by robust planning.
“If you have difficulty in obtaining funding, keep in mind that the banks want to see that you’ve got a plan – cash flow projections and good budgets get looked upon very favourably.”
Consider who in your business is managing these budgets and plans. Are there systems in place that allow you to access and share and contribute to accurate information quickly?
While this influence is out of your control, all businesses must comply with statutes and regulations and remain aware of any changes that can affect your product or service.
“We’ve seen clients that have had to diversify in another area to overcome the fact that the Government has changed the rules on their existing products,” says Johns.
Staying informed and ensuring that key staff members are equally up to date is critical. Again, if reviewing government regulations is made a key activity as part of your business planning, you’ll avoid being caught out when things change.
Capital acquisition expenses
As part of your business plan, you need to include a capital acquisition proposal to ensure you have the funds long-term. What sort of machinery do you need to buy? When does it need to be replaced?
“If you do use multiple pieces of expensive equipment, stagger your large outlays over several years.”
Don’t be afraid to use borrowed funds on capital expenditures, or even generally, if you need overdraft for your cash flow.
“Some people are scared to borrow, but talk to your banker, develop a good relationship and see what they can do,” says Johns.
Looking to plan for growth?
- Stick to your business plan: You’ve done all the hard work and the research, so stick to it. The business plan needs to be a living, breathing, document that you constantly monitor, rather than something you set and forget.
- Constantly monitor your cash flow projections: Be clear about what you want your business bottom line to look like by the end of each year. Revenue growth, smooth cash flow and the ability to re-invest in your business should be re-examined goals.
- Devote enough time to each area to stimulate growth: This is your 80 – 20% rule. Taking the effort to develop all areas of the business. Step back from the daily grind to see the big picture and avoid getting bogged down in the down in the details.
- Surround yourself with the right strategy partners: An accountant, lawyer and banker are the main three. They need to be part of your team and on the journey with you.
Written by: Thea Christie
Structure, strategy and cashflow, these are just three of the core areas you need to focus on for profitable growth – how is your business tracking? Complete a short survey and receive a DFK Profitable Growth Scorecard specific to your business and a complimentary Growth Strategy consultation with a DFK Business Advisor.
DFK ANZ is a national association of 15 independent accounting and business advisory firms. Established in 1991, it has built a strong reputation as leading experts, and is listed as number 22 on the latest BRW Top 100 Accounting firms.
You can help us (and help yourself)
Small and medium businesses and startups have never needed credible, independent journalism and information more than now.
That’s our job at SmartCompany: to keep you informed with the news, interviews and analysis you need to manage your way through this unprecedented crisis.
Now, there’s a way you can help us keep doing this: by becoming a SmartCompany supporter.
Even a small contribution will help us to keep doing the journalism that keeps Australia’s entrepreneurs informed.