Good Business: 7 Tips to Grow a Successful Company
MONEYTIPS
6/13/20264 min read
If recent events have taught us anything, it's to always be prepared for the unexpected. Regardless of the type of business you own or plan to create, the ability to be flexible and resilient are as essential as having a smart plan.
Whether you plan to grow your business for a future sale, to establish a multigenerational enterprise or simply because you enjoy the challenge of being an entrepreneur, the following actions can encourage and enhance the success of your venture.
1. Develop an Ownership strategy in the Context of Your Life Goals.
Start with your life goals for yourself and your family and then you can envision the steps to take to achieve those goals. Your business will be an important part of your life, so it's important to understand how your business must perform to contribute to your life goals.
When you're a solo entrepreneur, you can develop any strategy you like for your business. If you have business partners, you'll need work together on a mutually agreeable strategy and then write the details into your operating agreement or bylaws. Ideally, your business relationships will work so well that you'll never need to review those documents.
2. Research and Refine Your Strategic Plan.
Once you have the outline of your plan and have identified the required performance metrics required for you reach your life goals, it's time to detail specific strategies. For example, suppose your goal is to sell the business once it reaches a certain value. In that case, you'll need to develop ideas, research the competition and evaluate the challenges to achieving that valuation.
These steps are just as important to increase the longevity of your business for future generations. Growing a business takes time, but it also takes considerable planning
3. Assess the Tools You Need to Execute Your Plan.
After you have generated strategies for growth, you'll need to determine how that expansion can occur. This is particularly crucial for small businesses with a lean team of employees. If your company lacks the talent needed for your plan, you'll need to identify new resources. If you have someone in-house with the skills needed to take the business to the next level, you still may need to hire additional support for that person.
Whether you need to increase your staff, need additional training or more materials to expand, new financial investment is likely required. That means you need to review your cash flow and potential sources of additional funds. Your commercial banking team can help you with this evaluation.
4. Evaluate Organic Growth and Potential M&A Activity.
As you plan for entrepreneurial progress, you'll need to consider how much your expansion can come from internal, organic growth. A realistic analysis of the potential future of your business can benefit from an objective third party such as a business consultant.
If organic growth isn't likely to be enough to achieve your goals, a strategic merger or acquisition may be something to consider as part of your business plan. Identifying potential businesses to partner with or purchase can also benefit from a third party with fresh eyes on your company since owners frequently overestimate their internal growth potential.
5. Know Your Numbers.
While an array of numbers is part of any business plan, two essential numbers to know if you plan to transition away from your business are your “magic number" and your “walk away" number. The magic number is the amount of cash you need for lifetime financial security, while the “walk away" number is the net proceeds from the sale of a business after fees, taxes and other expenses are paid.
6. Develop Your Governance Strategy.
While a business consultant and your commercial banking team can help you with your growth plan, a valuable approach to getting third party input can be to establish an advisory board or a board of directors.
A board can provide an unbiased perspective and establish a culture of transparency and accountability for your management team. In addition to helping you identify ways to grow your business, your advisors can provide risk management expertise.
7. Anticipate Conflict.
Conflict among ownership partners and within the management team are a natural part of running a business. How conflicts are handled can contribute to a company's growth or lack of it. It's best if there are mechanisms in your governing documents to address conflicts. If those mechanisms don't exist, each conflict will need to be handled when it arises. Your third-party board, consultant or banking team may be able to advise you and assist in resolving conflicts without derailing your growth strategy.
Creating an ownership strategy in the context of your life goals for yourself and your family provides a foundation for your business success. That foundation positions you to understand how you need to work on your business, including decisions about strategy, capital, talent or risk management. It also motivates you to focus “on" your business as well as work “in" your business.
That ownership strategy works equally well for entrepreneurs who want to develop multigenerational family businesses. While their long-term objectives may be somewhat different, the strategy to combine personal and professional goals serves both types of business owners well.
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