Business owners and entrepreneurs aren’t the same because they come in all different shapes and sizes. However, one thing they can agree on is that they want and need to expand. Business expansion is the most sought after feature of a startup because of the many advantages it brings. From attracting new customers to branding opportunities, growth always boosts the bottom line.Ambitious bosses and owners know what they want and go for it, but growth isn’t as easy as it sounds. Unfortunately, 90% of startups fail at some point and there is only a 10% hit rate. Considering it’s a $600 million industry, it’s essential to get a slice of the action and fall into the latter category rather than the former. There is a problem, though – lots of businesses don’t understand where they are going wrong. Although they know they are wide of the mark, they aren’t sure where the mistake has been made.
To ensure you’re SME goes from strength to strength, it’s imperative to understand the flaws in your operation. Otherwise, you will grope in the dark for years without any real success. To find out more about the common reasons expansion never works, scroll down to continue reading.
Too Much Too SoonThe idea that success can be your downfall is a little backwards. How is this possible? And, what are you supposed to do – turn down work and reject money? Being successful is about seizing your opportunities, which is why there is no such thing as overstretching yourself. This is how entrepreneurs feel and think when they are informed they have grown too quickly. They deny it wholeheartedly.In reality, your success may be the biggest reason for your failure. Of the 90% of startups and SMEs that fail, 70% of them scale up too early.
Taking on more than you can chew means you need to work harder and more efficiently than before, and that may be tough. After all, employees may not have the skills and the recruitment process may go into overdrive. When this happens, the labour bill skyrockets and you end up spending more on workers’ wages than investments and profits.
And, don’t forget about the people you are in business with, your partners. An expansion is a finely tuned machine with a host of players, and, if one of them fails, the whole operation does too. Often, business owners don’t realise their suppliers are the weak link in the supply chain.
Single-mindedYou’ve already seen how a selfish attitude can get you into trouble. Not listening to advice and ploughing on regardless is a recipe for disaster as the company outstrips itself. There is another reason this type of attitude isn’t good for business: it only focuses on the building part of the process. To attract new customers and generate more leads, it’s essential to concentrate on the shoppers and clients.This is the key to business growth because it solves a problem for the people buying the product or service.
Once they have a bona fide reason to make a purchase, they’ll come back again and again. Why? It’s because they have to as there isn’t another item on the market which offers the same value. Sadly, 42% of SMEs don’t make it to their target goal and it’s due to the fact they didn’t fix a market need. In short, some businesses don’t put others first and consumers can spot it from a mile away.
Don’t let your excitement get in the way of a legitimate way to make money. As soon as you have an idea, don’t build it and then try and sell it. Instead, business owners need to find a solution and decide whether it’s a profitable one.
To do this, it’s important to stay in touch with consumers and to research the topic thoroughly
Home To OfficeAt a certain point, a home-based business has to move out of a coffee shop and into an office. Without space for employees and for growth itself, there is no way to sustain an expansion that will boost profits. However, the act of finding a corporate property is one reason growth slows down. Owners don’t have the right level of knowledge yet attempt to locate a property and negotiate a deal regardless. Even if all seems well, there is often a lot of money left on the table.
Finding ways to cut costs is a must to ensure your already limited budget doesn’t take a massive hit. SMEs that don’t have the correct amount of capital tend to slow down and stagnate rather than move forward, which is why insider knowledge is vital. After all, sourcing a building or office before it reaches the market is an excellent way to save a significant sum of money. Also, buyers’ agents for commercial property can negotiate a variation of the lease to your benefit. Old landlords can lock in rent hikes, for example, and you want them taken out asap to maximise profits.
For big expenditures, it’s not smart to trust your gut. The only way to get a great deal is to use professionals with certified skills and years of experience in the sector.
InvestmentThanks to your small budget, you keep the purse strings as tight as possible and only spend when necessary. Unless it’s an essential purchase, there is no way you will splash the cash and spend recklessly. Usually, this is a savvy way to maintain your spending and not rack up thousands of dollars worth of unnecessary debt. In this case, the rule is that you need to speculate to accumulate.Here’s why: investment is the key to growth.
Without new technology, employees or inventory, it’s impossible to scale up the operation. And, the demand never stops even when you think it’s about to take a turn for the better. As a result, business owners tend to get tired of spending money hand over fist and pull back. Or, they don’t spot that investment is important and refuse to sanction it. Stubbornness is a killer so you need to be one-hundred percent certain you are right.
Although it feels wrong, sometimes the only way to go forward is to spend what little you have or to find alternative sources of cash flow. Otherwise, the company will start to go backwards.
LeadershipBosses will gladly rip up the hymn sheet and start again if they feel the plan isn’t right. If that means firing employees who aren’t pulling weight, then so be it. As the person in charge, making tough decisions is part of the job. Of course, the management doesn’t look at itself in the same light.
It’s tempting to lay the blame at someone else’s door, yet your leadership skills may be the problem. Passion and dedication are important but they don’t cover over the cracks. Leaders need to be able to motivate employees, create a positive work environment and lay out their vision for the future. Those that can’t shouldn’t be in control, at least not alone.
There is nothing as hurtful as admitting you’re not the person to lead your startup into the future, yet you must be truthful. Otherwise, you will only hold it back and prevent it from experiencing the success you dreamed of when you thought of the idea, and you don’t want to be the blocker.So, are you the boss to take the company to the next step or should you step down?