Research your competitors
To start creating opportunities and growing your business, it's important to do some preliminary research to help identify the standards to assess your own progress.
Your competitors are your best source of business growth data. Complete the following steps to work out your competitors' average overall annual growth rate:
- Review statistics and published historical growth data of companies within your industry and/or market niche that were about your size when they started out.
- Compare that initial size to their current size to calculate their growth rate.
- Use multiple competitors' data to arrive an overall average annual growth rate.
This figure will provide a benchmark to assess your own business growth against your competitors.
Make sure you take into account circumstances which may have lead to higher (or lower) than usual growth rates, for example a start-up (with more marketing resources) may have higher growth rates than an established business.
Assess your finances
Many businesses fail to grow as a result of poor financial management. More often than not, a business plan that was used to help launch the business is forgotten about and left to gather dust on the shelf.
Produce and analyse your balance sheet, profit and loss and cash flow statements to answer the following questions:
- How does your actual results compare to your initial financial projections?
- How do these results compare to your competitors' results?
- Do you have a plan (and systems) in place to ensure financial growth?
- Who's responsible for implementing that plan?
- Do you need outside help to implement your plan?
Always try to make a profit. For example, if business expenses are increasing, consider raising your prices.
Remember, net operating cash flow is the amount of cash that a business has after paying its bills. If net operating cash flow is less than profit after tax, you're spending more than you earn.
Assess your production and service levels
By conducting a separate review of each product or service in your business, you'll be able to assess:
- how efficiently your business is operating
- the level of value you're delivering to your customers
- the costs of any production and/or service issues
- compare actual production/service levels with your predetermined 'best-case' levels
- calculate the financial loss associated with each production/service issue – the cost to implement subsequent remedial efforts
If you do discover problems, you might need to make some hard decisions and incorporate improvements such as:
- identifying and eliminating the underlying cause(s) of low production/service levels, such as incompetent management or inadequate skills development
- working out the cause(s) of recurrent supply-chain disruption or downtime – problems like mechanical equipment failures or incompetent third-party suppliers are common culprits
Decreased customer demand or diminished staff morale can also depress production/service levels, so keep in mind that different production/service problems require different solutions to resolve effectively.
Assess your human resources
Performing a separate cost and performance analysis for each staff member (or department) is a great way to assess your human resource efforts. Using KPIs, performance reviews and appraisals will help you to drive business growth via increased motivation and accountability.
- compare total labour costs and gross revenue over a specific time frame
- use KPIs, performance reviews and appraisals to help employees know how they have been doing and what further development or training they need to do to improve
If you regularly reconsider your KPIs alongside the ongoing implementation of a business plan, you'll find your that your indicators will more likely to stay aligned with your changing business requirements.
Assess your marketing
An effectively implemented marketing plan will be a key driver for business growth. Take time to analyse your marketing efforts to date by asking yourself if:
- you've created services and products that satisfy your customers' needs?
- your customers are spreading the word about your business?
- you've set SMART (Specific, Measurable, Attainable, Realistic and Time bound) marketing objectives?
- compile raw data from sources like customer feedback forms that indicate how respondents first learned of your business
- tally separate totals for the number of prospect inquiries and number of closed sales for each of your advertising providers and/or venues
- compare gross revenue and the total cost of each advertising outlet and adjust your marketing strategy accordingly
- use your research findings to fine-tune your marketing campaign for maximum effectiveness
Don't forget to:
- carefully calculate the lowest possible cost at which you can offer your product or service to effectively undercut the competition – while still making a reasonable profit
- consider external factors such as fuel costs or outsourced provider's performance
- conduct market research to find out the current prevailing retail price of your particular product or service and establish a starting point for analysis
- consider factors such as customer geographical location or demographic characteristics which helps to identify the likely cause of any significant price differentials