Your business may be small, but that doesn’t mean your dreams have to be! Just take a look at two of the biggest companies in the world, Google and Amazon, both of which began life as fledgling start-ups in oil-stained garages.
Growing a small business is all about thinking big. You need to have a clear vision of where you want your company to go, and pursue that vision with relentless determination. In the immortal words of James Cash Penney:
“Growth is never by mere chance; it is the result of forces working together.”
However, for many small business owners, growth can feel like a daunting prospect. With so much energy directed towards maintaining daily operations, putting time and effort into pursuing growth often ends up at the bottom of the to-do list.
But companies that don’t strategically plan for growth could be playing a dangerous game (and the odds may not be ever in their favour). Growth is a crucial component to the continued success and long term survival of most businesses. By not planning for growth, small business owners expose their companies to many potential risks, including being left behind in their industry and stagnation of daily operations. They also miss out on all the potential benefits that actively pursuing growth can have.
So if growing your small business has fallen to the bottom of your to-do list, then keep reading for some great reasons why now might be the time to bump it up a few places.
1. Meet Market Demand
No small business owner enjoys missing out on potential customers, which is why growing to meet market demand is first on our list. The key here is to accurately pinpoint the type of demand in order to capture it successfully.
Sometimes recognizing untapped demand is easy, like when a company has to turn down business due to lack of capacity. In this case, expanding into a bigger location or hiring more staff would help take advantage of this latent potential.
Other times, identifying demand will require detailed market research and analysis. This investigative research can help highlight underserved customer bases in other markets, geographical locations or new demographics. Expanding operations to meet such demands will create a broader customer base and help bolster market prominence, while also increasing profitability with more sales.
2. Stay Competitive
In the eternal words of the great Ricky Bobby, “If you ain’t first, you’re last!”
Now, we’re not comparing small business owners to pretend Nascar drivers here, but in today’s highly saturated business environment, staying competitive is still absolutely essential.
If a small business cannot offer a good enough value proposition to capture or keep customers, then that business is likely to fail. Having a strong value proposition is all about staying ahead of the competition, and one of the best ways to do so is through growth (or corporate espionage, though we suggest sticking with the former!).
Growth helps protect a company from the competition by ensuring that it doesn’t get left behind. By streamlining processes, improving a product/service, or investing in new technology a company can strengthen its value proposition and differentiate itself from the competition.
In the scenario of untapped market demand that we saw earlier, if the company in question does not grow to capture these potential customers, then there is a high likelihood that they will be snapped up by a competitor. Not only is this missed potential revenue, but it can also strengthen the competition’s foothold and give them greater market dominance.
3. Reduce Costs
For many small companies, the cost of doing business is quite high. One major benefit of growth is that it will often lead to reduced costs thanks to that little miracle of microeconomics known as economies of scale.
Economies of scale refers to the overall cost reductions that occur as production increases, which happens because operational costs become spread over more units of production.
This is most noticeable with fixed costs, like administrative and managerial expenses, as improvements in productivity normally don’t equate to extra work in these areas. But increased productivity can lead to reductions in variable costs too. For example, as a company begins ordering larger quantities of raw materials to meet their new production levels, they may benefit from bulk discounts and even gain better bargaining power.
4. Increase Stability
Businesses are a bit like boats, the larger they become, the more stable they tend to be. This is because bigger companies are generally more diversified with multiple income streams, safe-guarding them against turbulent times.
By expanding into new markets, customer segments and products, businesses can mitigate the risk of market and economic downturns. If one market begins to struggle, or a certain product starts performing poorly, they will have other markets or products to help bolster sales.
Also, as a company grows, so does its supply chain. A broader supply chain comes with many benefits, not least of which is increased stability. Having a larger pool of suppliers helps safeguard against unforeseeable disruptions that can wreak havoc on a company’s ability to function at full capacity.
5. Build Brand Loyalty
In today’s connected world, businesses need to have a strong brand that customers can easily identify and connect with.
Branding influences how people feel, think and talk about a company, which all have a huge impact on how likely they are to become loyal customers. And while growth alone doesn’t necessarily create a desirable brand, it certainly goes a long way towards establishing a stronger brand identity and increasing brand awareness.
Customers generally perceive larger companies as being more trustworthy. They subconsciously determine that a bigger company means better products and services, higher levels of customer service and greater accountability. They also have more faith in the company’s longevity, which is important for peace of mind when it comes to continued service, returns, warranties and exchanges.
6. Better Opportunities
Small businesses have to work for every inch of ground they make. From finding suppliers to securing contracts with distributors and everything in between; when a company’s numbers are small, so are its opportunities.
But as a business grows, new doors begin to open. Growing companies attract bigger and better connected clients. With larger, more consistent quantities comes access to new suppliers. Expanding into new geographical locations means relationships with new distributors. Increased sales lead to a higher profile with retailers, resulting in more prominent product displays.
And as you can see, the thing about doors is that one tends to lead to another. The more connections a company makes, the more opportunities present themselves. And with more opportunities come more connections still, which lead to even bigger opportunities, which create even better connections, which…well, you get the picture!
7. Quality Staffing
The heart of any great business is the people who work there, although the Keurig machine is a very close second! One of the biggest challenges that every small business has to face at some point is finding the right staff.
Businesses that are actively pursuing growth are known to attract stronger job candidates because they tend to provide better opportunities. Growth also equates to higher visibility in the job market, meaning a greater number of quality applicants.
But as any small business owner knows, finding the right staff is only the first step, the real challenge is keeping them. Being a part of a business with momentum can be a mentally stimulating and professionally fulfilling experience that fosters excitement and the desire to perform strongly. Growing companies also have more room for faster advancement, which plays a key role in staff contentment.
Summary:
Don’t let the size of your company dictate the size of your dreams!
Small businesses are just big businesses waiting to happen.
If your small business isn’t actively pursuing growth in some capacity, then now might be a great time to start. Once you point your company down the road towards growth, anything becomes possible and the sky really is the limit.
Just remember, “growth is never by mere chance”, and every small business is different. To be successful, you’ll need to create a clear and decisive growth plan based upon your specific goals.
Not sure where to start? Check out Part Two of this series to learn 7 Strategies to Grow your Small Business.
