Small business owners like to dream big. If they didn’t dream big, they would never commit to the bold act of becoming a small business owner in the first place. Dreaming, or more realistically what should be called goal-setting, helps a small business owner grow the company and pursue ever-expanding and long-range goals.
Goals May Be Unrealistic
At some point, however, the goals may actually become unrealistic. Regardless of the current success a small business enjoys, the owner must realize that continued success hinges on the ability to meet commitments...to customers, employees, investors, or lenders. If a business overextends and starts to miss commitments, then all of the hard work previously put into the business might be lost.
One of the biggest areas of growth risk relates to accepting more business than can be handled efficiently. Although a small business might have experienced a phenomenal growth curve in the past with excellent execution, it cannot automatically be assumed that the business can continue on the same path indefinitely. While resources may have been adequate or, even underutilized, at the start of the business, those same resources might now have reached their full operating effectiveness. Suddenly, a small business might find that its growth cannot continue without an influx of additional resources – skilled employees, plant or location expansion, additional vendors, and/or an influx of additional funding.
The key to preventing a fast-growth, potential business disaster is with prudent strategic planning. Revenue planning is just one segment in a company’s overall strategic plan. Consideration must also be given to all facets of the business including:
Budgets: Short and medium-term including cash flow and capital asset budgets
Human resources: Skill-needs projections, additional employees, salary and benefit projections, and training plans
Building and equipment: Location, potential for expansion, necessary fixtures and equipment
Technology: Hardware and software to handle increased business
Supply chain management: Integrated, effective SCM throughout entire business
Vendors: Expansion plans to handle increased volume of raw materials, inventory, supplies, plans for cost savings, alternate sourcing opportunities, and contingency backup plans
Research and development: Adequate R&D depending on the type of business
Marketing: Understand full market potential, target segmented markets, and explore all marketing opportunities
Capital structure: Investigate options for additional debt and equity financing
Recognize Internal Resources
As a small business grows, it can quickly outpace its internal resources. It is critical to constantly assess a business’ strengths and weaknesses, so it can capitalize on strengths and improve upon weaknesses that cause a competitive disadvantage in the marketplace. Assessing and supplementing a company’s skills early in the growth process is a key ingredient for successful growth. A small business cannot wait until the need arises but must plan in advance so when rapid growth appears, the business will be ready.