Tips for Growing A Business
Oftentimes, growing a business is like starting a new business, especially when adding a second location. Businesses grow from one level to the next, step by step, inch by inch, always discovering what works and what does not. If all businesses were identical and every business owner was the same, growing a business would be a cinch – in every case. However, there are far too many factors impacting the outcomes.
Regardless of a business’s type, product or service line, location, or status, the criteria to evaluate stays the same. Passion is the driving force because without it, the business will not last long term anyway. Other tips for successful growth include:
1. Managing Money
Being in business usually requires struggling for the first two to three years before making a profit.
- Owners need income to survive while growing the business. Normally, spouses support the family until the business is profitable. If not, the owner needs a large cash injection to operate the business until it is can support itself and the owner; or the owner needs to have a side job to pay personal expenses.
- If adding in a new location the first location has to be able to support the second while it is in its infancy. Just like a startup business, the second may have to wait two to three years to show a profit.
- The business finances determine the final outcome. Financial reasons are a major cause for business failures.
The key activities to ensure, any of which can keep the business from growing and hurt the business financially, are:
- Keep good records (daily), staying on top of sales/costs
- Never get behind on taxes
- Turn merchandise (replacing popular items and liquidating old merchandise)
- Pay bills on time (working with creditors if payments are going to be late)
- Market/Advertise effectively
- Follow up with customers, and
- Manage resources (money, time and people)
2. Protect Assets
If major assets are lost in the business, growth is delayed and could cause the business to go under. Insurance is necessary when protecting assets, along with good security. The key protectors are:
- Liability Insurance covers the business against lawsuits due to personal or property injury.
- Fire and Theft Insurance covers the property, inventory, furniture, equipment, materials, and other items that are expensive to replace, even with deductibles.
- Worker’s Compensation is state required insurance covering employee accidents on the job.
- Health/Life/Disability for the owner is also important. Some owners carry disability insurance on themselves and key employees in case of emergencies. When an owner is in the hospital, the business continues to gather expenses while losing sales. Not having health insurance for the owner could cause a business to go under.
- Security Systems help protect assets, but they should not be the only protection.
3. Hire Qualified/Competent Employees
Good employees are an asset, but bad ones are not. When hiring, owners need to:
- Find a “right” match between candidates and the job.
- Know how to interview and to hire competent people.
- Check references/experiences thoroughly.
- Develop a list of important work-related questions for the interviews.
- Train new hires (all employees) on business policies, procedures, and simple activities like handling customers, proper work attire, attitude, and all duties. Well trained employees are like oil in an engine.
- Reward existing employees well for good performance.
4. Maintain Operations
Ideally, the owner strives for smooth operations. Here are some simple but effective ways to operate:
- Set normal hours of operation (stick to it and don’t vary). Businesses lose customers when they are closed during normal hours.
- Outline operational tasks for all employees.
Develop policies and procedures and distribute to all staff.
- Create checklists to ensure important tasks are completed for events, trips, or large projects.
- Start each morning by prioritizing tasks.
- Avoid time wasters from phone calls and interruptions.
- Prepare a contingency plan for illness of key people, crises, or unexpected setbacks
- Manage effectively.
Growing the business is challenging and rewarding. If the owner has passion for the business and plans to one day retire, growing the business is necessary to get the business to the necessary retirement level. Owners need to realize they have to decide how to grow it: Do they stay the artisan or technician; become the manager; or hire people to do those jobs so they can continue doing what they love.