Despite the pandemic and recession concerns, small business optimism remains steady. According to Capital One’s latest Small Business Growth Index, 64 percent of businesses view conditions as “good or excellent.”
Optimism aside, many businesses find their growth plans thwarted at every turn. Surprisingly, one of the biggest impediments to growth is the business itself. Many businesses simply aren’t operationally ready for growth because a lack of skilled labor, poor hiring decisions, a lack of competitive intelligence, and so on.
How can you make your small business grow faster? What impacts the growth of small businesses? How do you finance growth?
Here’s a round-up of some of the most common barriers to growth and steps you can take to break through them as you look to capitalize on key small business trends for 2021:
1. Ignoring Business Indicators
Everyone wants revenue growth, but what form will it take and are you ready to grow in that area? Study your business indicators regularly to monitor growth opportunities. This includes your sales pipeline, conversion rates, and market trends.
Things to look out for include success in one market or location and the potential to expand into another. Is a big sales deal on the horizon? Is your pipeline trending favorably? Is success in one area of product development opening new doors of opportunity for others?
2. Overlooking the Competition
Competition can be a great driver for growth if you approach it correctly. There’s no point making it your mission to be better than the competition if you don’t have a deep knowledge of where you stand against them. A powerful tool for doing this is a simple SWOT analysis.
SWOT stands for “Strengths, Weaknesses, Opportunities, Threats.” A SWOT analysis can help you identify what’s working and what isn’t, and where to concentrate your energies.
3. Forgetting About People Until It’s Too Late
Despite record high unemployment rates, a lack of skills and abilities remains a major concern. Today, 40 percent of organizations report that they have been negatively impacted by talent scarcity.
To grow you need to surround yourself with great people. Always be on the lookout for talent. Build a stable of independent contractors who can get to know your business well and contribute on an as-needed basis. Once you’re ready to grow they can step in with minimal ramp-up and help you meet your goals.
Another option comes in the form of mentors. Having someone beside you who’s been there before as you enter new territory can be invaluable.
4. Not Accounting for Risk Early in the Growth Phase
Small business growth doesn’t come without risk. As you plan your growth strategy, have a “Plan B” in place that accounts for any hurdles along the way that might impede growth. Things like hiring problems, manufacturing issues, unexpected expenses, cash flow challenges, patent infringements, and so on.
Go back to your SWOT analysis and identify these risks or threats and think about ways you can fix or get around them. These are also good conversations to have with your mentor as well as your accountant and/or lawyer.
5. Failing to Plan for Cash Flow Issues
With growth comes extra cost. If your outgoings are more than your income, even for a short period, paying your bills gets difficult. In fact, cash flow issues are one of the most common reasons why small businesses fail—90 percent close their doors for this reason.
To preserve cash flow while growing your business, you may need access to funding. But take time to consider which loan types make sense for you because not all are created equal.
For example, if you’re looking to fund expansion or need an injection of cash during unpredictable operating cycles you may want to explore a business line of credit. You can get set up a line of credit before you need it and only pay for the funds you use. Lines of credit are revolving, and monthly payments don’t kick in until you dip into the cash.
Another option is a term loan. This gives you access to a set amount of money with a specific repayment schedule. Term loans often have low interest rates and provides the funding for small business growth initiatives such as opening a new location, upgrading equipment, purchasing vehicles, or remodeling your space. With a term loan funding your growth you can preserve your cash flow for other areas of your business such as payroll.
To make planning work for your business, you should revisit it as you grow. In that way, it’s less about the plan and more about planning. For tips on doing this consider reading: How to Create a Business Plan for Any Stage of Your Company.
Ready for more?
Apply for funding and find out if you qualify today