Over time, a company’s financial information will reveal signs of whether or not it’s time to grow the business.
It may be time to look at growth opportunities if all of the KPIs are performing well, cash is flowing, and you have been “in the black” for a significant amount of time. Financial data provides a wealth of information and insight into the current and future potential for a business. When the numbers suggest the time is ripe for moving the business forward, how do you go about doing so? For perspective, here are four different ways companies grow their businesses...
1. Don’t Mess With Success
So your company is at a point where it is profitable, and you have healthy cash flow (and maybe even some surplus). As far as short-term projections go, it looks as if the business will stay in a good financial place for a while.
For some businesses, not going after any new businesses ventures is one way to grow the business. This is the belief that if your business is already seeing some level of success with its current business model, why fix what isn’t broken? In reality, there is always room for improvement.
Perhaps it’s time for the company to hire additional sales or service members in order to take on more customers/clients. Maybe it’s time to divert some of the extra surplus towards increased marketing efforts and even employee performance incentives (which besides keeping employees happy, helps reduce turnover).
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2. Add New Products and/or Services
A good way to start expanding a high-performing business is to add new products or create new services for clients. There are a few different approaches to adding more offerings.
One way is to invest funding into a “test” service or product, track how it performs, and then decide to open it up as a full-fledged business offering.
Other companies will conduct extensive market research to determine what the demand for a product or service is before exploring its expansion.
3. Expand
For brick and mortar businesses, one way to grow business is to add new locations. Before beginning the process of opening an additional location, the company must first take the time to review and plan financially. For instance, it’s critical to project cash flow over a period of years to see whether or not expanding is a good investment.
For service-based companies, expansion could mean expanding the service area. Although this doesn’t necessarily require opening a new location, arrangements need to be made to accommodate additional staff that will be hired to handle the increase in business from widening the scope of service.
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4. Get Bought
This methodology has been and continues to be very popular with start-up businesses in the technology sector. A company creates a product or a service, builds a strong following, begins to turn a profit, and then gets bought by a large technology conglomerate like Google, Yahoo! or Facebook.
Although many businesses will only dream of being bought by one of the largest companies in America, there are opportunities to have the business acquired.
Keep in mind acquisitions are not typically an easy endeavor; not only will your company need to assess its financial health as well as the finances of the potential buyer, you can also expect a large amount of legal proceedings and tax paperwork.
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Whether or not it’s time to explore growth opportunities for your business, as with life, nothing comes easy. Paying close attention to your company’s KPIs and timely, accurate financial intelligence, as well as staying on top of market trends and opportunities will help you pave the path for future business success.
Next Step: Client Accounting Services
Companies that experience growth are doing something right, but managing your finances before, during and after growth is what will lead to long term success.
As a small business owner, you’ve created a successful model based on your core competency – the product or service you went into business to sell. You are ready to grow your enterprise, but lack the financial or accounting experience to make an informed decision on your next step.
You realize that you need the guidance of an accounting partner to grow, and outsourcing is becoming a great option. But how do you decide which accounting provider is the right fit for your business?
Fortunately, in recent years the accounting industry has developed a services model called Client Accounting Services (CAS) that provides automated technology and affordable accounting guidance. Thanks to cloud-based software and technology, small businesses and nonprofits can now obtain bookkeeping, accounting and controller services virtually, from remote teams of accounting experts.
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