The Budget announcement has sparked record levels of business confidence and optimism, with many SMEs looking planning an expansion in their operations in the new financial year.
But with growth comes risk, so SMEs should plan carefully before committing to major expansion.
You need a strategy
Part of this involves thinking strategically.
Research shows many SME owners either do not have a business plan, or fail to update it regularly. That’s understandable: running a business requires long hours with a focus on day-to-day operations and short-term cashflow. It’s easy to lose sight of the bigger picture.
But that’s exactly what you need to grasp before planning future growth.
Expansion usually requires significant investment – either through greater levels of debt or from the owner’s own pocket. So, it’s important to get it right.
Get outside advice
Many business owners are reluctant to seek outside advice that can help them adapt to change, or get an outside perspective on how the business is really performing. Many prefer to rely on “gut instincts.”
It’s important to make sure business operations, cashflow and access to capital is considered first to manage risk and ensure business survival over the longer term.
Too frequently growth is impulsive, funded by personal or family debt. That can be bad news on both the business and the home front.
Business advisors, lawyers and financial planners can help plot the right course to structuring business, personal finances and future investment strategies.
Outside advisers will also ask the tough questions, including analysing longer-term objectives. For example, if you intend to sell the business in five years your approach might be different from someone looking to grow a family company over the next two decades.
Upgrade technology solutions
One of the best things to happen for small business in the past five years is easy access to affordable technology solutions, like data analytics and cloud computing.
These solutions save time, are more secure and provide a way to keep track of progress. It also means business owners can make better use of advisers who can analyse the information to help with growth plans.
In fact, research from the Commonwealth Bank (Small Business Barometer, April 2017) found adopting new technology provided a boost to business confidence and was a major factor in SMEs who expect revenue growth in the next 12 months.
Customised technology packages that can manage accounts, payroll, cashflow, compliance and reporting bring about better efficiencies and productivity — and ultimately make a business far more agile and adaptable as it grows.
In addition, cloud systems offer a real-time dashboard that provides a streamlined, on-the-go snapshot of all operations — anywhere, anytime.
And with this extra analysis, smaller businesses can be far more competitive against their bigger counterparts.
Ultimately, it’s about making sure you use all resources on hand to ensure the fundamentals are right for growth before making any critical business decisions. Getting that right first will ensure owners have the best chance of success.
Adam Griffiths, Director, DMCA Advisory