How To Grow: The Truth About Building An Enduring Company
From time to time a business owner calls with a question that varies around the same theme: “How do you help to increase business profits?”
It is not a simple answer to give in a 5-minute call but a few targeted questions usually gets to the heart of the business owner's real issue. Entrepreneurs want to get comfortable with the art of increasing their revenues. The bigger question is whether the company is truly ready for growth.
How Do You Know You Are Ready To Move To A Stage Of Growth?
You are ready for growth if your company consistently:
- Offers the exact product or service your customers are looking for
- Has motivated and productive employees
- Have sound operational procedures and organizational structure
- Produce and consistently follow a documented business and marketing plan
- Put forth best efforts to achieve the best results possible
Why Is It Important To Have The Above In Place?
Let’s say your company did one million dollars in revenue last year. From an outside point of view you may look like a well-run entity. If you pay all of your bills while paying yourself and meeting payroll, life might look pretty good. Add a 5% profit over expenses and you end up with a $50,000 a year profit.
You might decide that it's a good plan to raise your volume to $1.5 million this year and will make you more money. This may not work the way you anticipate. In order to generate the extra volume you may need more inventory, space, employees, office expenditures, etc. When you work through the numbers you realize that you are actually losing money because the increased expenses increased your costs and did not produce the extra revenue to improve profits.
Look at this another way. Say you did the same one million dollars, and with a proper assessment of the business created a goal to be 5% more productive with the same level of staff and expenses. With an equal amount of resources and 5% more productivity, instead of $50,000 in profit year-end you end with the number being $100,000 in profit doing the same volume. Take this another step further, with careful planning and execution, a 5% reduction in expenses could actually end up producing $150,000/year in profit, without using additional resources. How does that sound?
You can make these kind of results happen! Remain focused and follow both a solid and realistic business plan with goals. Share your vision with a dedicated group of employees. Being shrewd while examining the business on a regular basis to make it as profitable as possible, puts you in the arena to consider future strategic growth plans.
It’s a solid performance model that wins the profit game in the end. Take careful steps to plan your own growth strategy wisely.