By Daniel Ball
From the early stages of managing an SME it’s natural to look at what your next stage of growth looks like, and how to get there. But, as you strive to meet growth ambitions, you can expect to meet a host of challenges along the way.
In a survey of 200 UK businesses, eProcurement software company Wax Digital found that while many UK businesses are reporting organic growth, 80% are juggling up to 15 growth challenges. So, while business leaders have a recent track record of growth, many have hit one or more roadblocks preventing them reaching the next stage. This includes not having a grip on costs and spending, cited by nearly half, and skills and talent shortages, which 39% say they suffer from. A turbulent political environment, including Brexit, was another roadblock for small businesses according to the survey. With our future political state still uncertain, many small business owners aren’t sure how their growth will fare in the next few years and how they can overcome the obstacles it brings.
Despite certain growing pains, business owners tend to have a clear vision for their expansion plans. 92% said that they have a strategy that looks beyond ‘organic’ growth with the vast majority of business owners not satisfied with simply keeping the wheels turning, and are looking at how they can instigate further growth. There may come a time when you consider new channels to market, for example, a new online channel or through a value-added reseller, and 43% of business owners looking beyond organic growth said that adopting new channels to market is a priority for them. Expanding the business’ existing product and service range is also a key priority for growth and 38% of respondents have plans to do this. Whatever a business has planned to grow their business, the biggest challenge is often identifying the right time and if the business is ready for its next stage of evolution.
Businesses guilty of trying to ‘run before they can walk’ risk their plans for growth bringing more pain than benefit if the business’ foundations aren’t able to keep pace with the changes. Questions such as ‘can the supply chain support growth’ or ‘have we got the right suppliers on-board’ need to be asked. If the data to enable you to evaluate supply chain performance and review contracts isn’t readily available then it needs to be put in place so that you can effectively evaluate what support you need to launch a new product or service to market, and whether your current supply partners are up to the job.
Also if you decide that gaining external funding will enable growth plans, you will need this information at hand in the consultation stages. By optimising internal systems, including introducing formal procurement, businesses can also get the firm grip on costs and spending data – so often a cornerstone of investor due diligence – that nearly half don’t have, and cite as a key growing pain. A system that restricts the resources employees can buy and from where, which also provides a standard approach to all spending, can reduce the risk of maverick spend and reputational harm, and give you that firmer grip on finances.
Gaining a firm grip on spending also lies with optimising your supply base and production. As your business grows, you may need suppliers to scale up and meet a greater demand. This is the time to evaluate and check that your supplier is able to meet your demands, and if not, you may need to look elsewhere. If you do need to consider a new supplier, check their ability to scale and support any anticipated future growth predictions.
Business growth is rightly high on the agenda for many UK organisations but unless you adapt your business processes to support growth you may find that your plans for growth are untenable or restricted. Planning for expansion should always start with preparing the business’ foundations for change, and only when you’re ready can you take a strategic view of how the business can reach new heights.
Daniel Ball, pictured above, is director at Wax Digital