Growth is one of the most important things for any business. Even if you don’t want to grow in real terms, opening new branches, reaching into new markets and dominating the world, all businesses experience a natural turnover of customers and if you want to maintain your share you need to pushing forward to attract new ones as the old fall away.
But it can still be dangerous. Even this universal drive shared by all businesses can hold risks if it’s not planned for properly. Today we’re taking a look at some of those risks, as well as the key actions you can take to reduce them so you can seek future success and protect your business at the same time.
Business growth needs funding. There’s no way around that. Whether you’re planning to research and add new products to your line up, expand your marketing or open a whole new branch, the money has to come from somewhere and that always comes with tradeoffs. You hope, of course, that your new venture will quickly repay its investment, but it might take some time, and during that lag, you’re financially exposed.
Funding your business from your own personal bank account avoids giving up any control over your business or repayments, but it has little else to recommend this. This is gambling and you could lose everything to it.
Pulling from your business’ own war chest is a more sustainable way to fund, especially smaller projects. Saving up to buy a new piece of equipment that expands your business’ appeal is a slow path but a reliable one. Unfortunately more substantial projects are unattainably distant with this sensible method.
Business bank loans are a stable form of funding – if you can get one. In this time of financial crisis and stretched credit, banks are much more reluctant to expose themselves and insist on stringent repayment terms.
Finally, angel investors – think Dragons Den – can offer big funding injections, but will expect a stake in the business, and a voice in your decision making process, which may be the hardest to swallow of all.
But the risk of a financial overstretch may not be the most dangerous one you face through growing your business.
Your biggest asset, as a business, is your brand. It’s a hard thing to define: your brand encompasses your reputation, your position within the market, your aesthetics – it’s a personality your customers assign to you and it’s built out of every interaction your customers have with your business. Any kind of expansion has a big effect on your brand because it’s a flood of new interactions and information for your customers. Failure can be fatal to a brand because it happens right out in the open for everyone to see. If you’re asking your customers to trust you know best but visibly make big mistakes, why should they find you a trustworthy expert?
Even successful expansions can damage your brand over time if they don’t fit together into a coherent whole. You need to be building out one cohesive brand, not adding every new product you can get a good deal on!
If these issues are starting to concern you it might be worth talking to the one of the boutique consulting firms London hosts, to come up with a plan for your business to see it safely into the future.