When you’re a start-up or an SME, the answer to the question “to grow or not to grow” is simple: you need to grow to achieve scale and stop the cash burn. However, when you “choose” to grow, or how fast you do it, is a much trickier question.
Growing pains are as common in business as a child in the stages of development – a sign your business or organisation may not have properly developed the internal systems required to take the next step. To minimise potential impacts, you need to anticipate the key requirements at various points and have a considered, long-term business strategy to keep up with consumer demand for your services or products. Here’s how you can fight growing pains:
Before you even consider growth, you need to define what success looks like from an expansion viewpoint. Success for a start-up or SME varies. For the former, cashflow is paramount and for the latter, strategic planning and coordination for long-term viability is most important. Focus on what you define as successful as you grow and share this with your employees to ensure you are all moving forward together, at the same pace.
This may be the most important step to minimise the impact of growing pains – to develop a plan and strategy for when and how fast you grow. Planning is dedicating time to the resources and schedules for the operation of your business. Strategising is evaluating how you can improve your business performance, customer experience or profit model. It’s crucial you make time for both.
For us, the right time for our business to grow is when we can balance new customer demand with our internal systems and processes. Growing faster, for us at least, generally costs more per customer as we need to engage more expensive channels within our business model.
This will differ from business to business, however, as you move from one stage of your plan to the next, it’s important to take a step back and ensure your internal systems and processes can cope with the demand. There will be some give and take as you grow, but it’s better to be proactive, not reactive in this space.
As a start-up or SME, you need to consider how you can continue to deliver the same customer experience or product that people expect from your brand as you grow. For us, this means making sure our business model is scalable. Otherwise, you can risk “winning” customers only to disappoint them as you may not meet their expectations.
A scalable business is one that considers how the business model will affect the bottom line when you expand operations. Businesses with high scalability grow with lower capital requirements and aren’t limited by the same sales-cost relationship as a linear model. Initial costs may be higher, but when you think long-term, it’s much easier to deliver greater numbers of the same product and experience to your customers.
While there is no secret sauce to how to grow your operations, the “right” time to grow is a trade-off on the cost for your business to grow and the ability to continue to deliver the same customer experience that enhances your brand. Sooner or later, most start-ups or SMEs will reach a crossroad and it’s up to you to decide if you’re ready to take your business to the next level.
Luke Blincoe, CEO, ReAmped Energy