starting their own businesses is like giving birth to a child, formed
entirely from their own dreams and passions and brought into being through
sheer determination and hard work (dare we use the word ‘labour’?).
Most entrepreneurs are intensely protective of their business and will
fight like a mother bear to protect it from anyone or anything that may
threaten its growth and success.
When you first begin, you do everything. You are the CEO, the marketing
director, the bookkeeper, and the receptionist. But just as a child
doesn’t stay a child forever, sooner or later your business will reach
the point where you need to make some decisions about its growth.
When your business is in its infancy, you tend to it with great care.
You nurture it. You carefully work out your business plan. For as long
as you can, you do everything yourself and as long as everything is
getting done, this is the most efficient use of your resources.
You may be satisfied with the level of income you make as a one-person,
home-based business and decide you don’t want it to grow beyond that
stage – there’s nothing wrong with that. If you do hope to expand your
income and grow your business, however, you must go beyond start-up and
start thinking strategically about how to move your business toward
growth and expansion.
If you know you’re going to want to grow your business, it’s wise to
begin planning how that will happen early in your business. You won’t
be moving toward growth for a while, but if you plan to expand in year
three, knowing where you need to be in order to do that helps you set
goals and milestones along the way that will prepare you for that next
step.
Initially, however, you need to take care of your business in its early
stages so it’s ready to grow when the time comes. Here are some
strategies to prepare you for business growth.
Be aware of your limits
In the early stages your business is all-consuming. It takes up most of
your thoughts, your energy, your time and your resources. When you first
start out, make sure your life has room for the energy your business
will require. Don’t enter into a lot of commitments outside the
business. Take care to create space in your life for things outside of
work, but recognize the toll it takes during the start-up phase.
This is not the time to embark on aggressive marketing or advertising
campaigns. Wait until you have the business resources to satisfy the
demand you will create. Your business can crash and burn if you take
on more than you can actually deliver.
Earn an income from your business
When setting your pricing, make sure you include a wage for yourself in
your overhead costs and add a realistic profit margin (say 15-20%).
Remember, price = costs plus profit margin.
Many small business owners simply look at income and expenses, without
recognizing the need to create a salary and a profit margin. I’ve heard
business owners say, “If I make money this month, I’ll take some out of
that to pay myself.”
Your goal should be to create a sustainable income from your business,
preferably an income that will grow as your business does; that will
never happen if you don’t begin paying yourself as part of the cost of
running your business.
Profits belong to your business, not you
Your business’s profit does not belong to you; it belongs to your
business. This is a very important distinction.
Your salary or wage should be covering your expenses, and the money
your business makes above expenses should be invested back into your
business. This is where your funds for expansion during the next growth
phase of your business will come from. It is an important strategic
aspect of business growth.
Spend cautiously
It may be tempting, when you’re starting your business, to go out and
buy the newest and best of everything but it may not be the best use of
your resources.
If you’d like a snazzy new printer but your old one works fine, stick
with it until you really can afford a new one. Barter for services
until you are able to pay someone to perform them.
You may decide a new laptop is a necessary start-up cost, but be honest
about what you really need. Perhaps a $750 laptop will do you just fine,
even though you may be tempted to get one with all the bells and
whistles for $3,000.
If you spend cautiously at the beginning, you’ll have more available to
you later to upgrade as you need to. If you break the bank in the first
few months, you’ll be in trouble if your cash flow doesn’t meet your
anticipated expenses.
Know when it’s time to grow
Somewhere between the one and three-year mark, you will notice that
your business may be levelling off. This is an indication you’ve
stretched yourself and your resources as far as they can go.
On your own you can’t take on any more clients or generate any more
revenue. At this point it’s time to make the conscious decision to grow
your business. This may mean expanding your product line or services,
or hiring staff and taking your business to the next level.
Moving beyond the one person show can be a scary prospect, but if you’ve
taken care of your business during its first few years you’ll be well
prepared to take this next step.
Follow the plan you prepared when you started your business and move
forward with confidence as your baby grows into an adolescent, and
eventually a grownup business!