How (and when) to grow your business
10 August 2016 -
Fear of failure is one of the biggest inhibitors to business growth, but shrewd marketing can make the difference
Growing any business is a significant challenge for bosses, but not harder than starting out, entrepreneurs report in a new study that explores the emotional highs and lows, sacrifices and fears faced by leaders while expanding their firms.
Surveying 350 UK small business owners who have been attempting to grow their businesses in the past two years, research conducted by web-to- print service Avery WePrint found that more than half of respondents said starting a business was harder, compared to over a quarter who felt that growing was more difficult.
A further 22% were undecided saying both pursuits were equally challenging.
Entrepreneurs and sole traders emerge in different ways and forms, but they commonly share a unique work ethic.
As described by Time magazine: “Entrepreneurs don’t focus on the risk of losing, but rather on the risk of not gaining. They aren’t scared of losing everything and living in a box. They are more concerned about missing out on living an extraordinary life, or not making a big impact on the world.”
And this perspective is demonstrated in now mythical tales of numerous start-up companies developing from a group of dorm room-based tech nerds to multinational, industry leaders employing tens of thousands of people.
However, the new report shows that bosses trying to follow suit by growing their firms often feel a mixture of fear and excitement.
Almost a quarter of business owners report feeling fearful during the growth process, with the study finding that despite a confident exterior, many small business owners tended to be quite self-critical citing ‘failure’ as their biggest fear.
Losing money followed this, with almost a quarter of businesses stating this was their greatest concern.
Financial constraints are a leading worry for owners, with poor cash flow management noted by many experts as a major killer of growing companies, with more than half of new businesses not making it past their fifth birthday.
As your business grows, more money will be need to pay for new staff, facilities, raw materials, supplies, developing new products and features - to name just a few.
Furthermore, businesses that quickly capture the customer’s imagination can be difficult for bosses to control, as overtrading can cause them to grow beyond a sustainable level. With business activity increasing alongside costs, cash often has to be paid out of the business before cash from sales is realised.
Therefore, while a lack of working capital is not the same as unprofitability, the effects can be just as catastrophic.
Having started the full service promotional staffing agency Victory Marketing Agency, the firm’s President, Vinny Antonio, lead the company to a number of accolades including Inc.com’s Fastest Growing Private Company award in 2013, 2014, and 2015.
However, maintaining an austere approach to the bottom line was particularly difficult.
“Cash flow management for a rapidly growing, bootstrapped company can be harder than the world’s most difficult Sudoku puzzle,” he said. “ It’s almost a full-time job staying on top of who owes you what and who you owe, and then prioritizing those payments. All the while, you’re pushing for more growth, but with that comes additional expenses — most notably, your executive team.
“Good talent doesn’t come cheap, and you often have to find creative ways to lure the right personnel to your team.”
In addition to financial shrewdness, the Avery WePrint study has also identified effective marketing as critical to a growing business.
Over the past two decades the advancement of the internet, email and social media has added a new dynamic to traditional forms of marketing.
Over a quarter of the small businesses surveyed said they planned to increase their sales and marketing activity in the next two years. Networking, new websites and increased social media activity were cited among the most popular tools for marketing a growing business.
Digital marketing wasn’t the preferred route for every business, however, and many favoured sending something real in the post too.
These traditional tactics were popular with more than 20% of small businesses, who all said flyers and direct mail were part of their growth marketing plans.
But some have used more unusual tactics.
Brandon Doyle, co-founder of Wallaroo Media, introduced a strategy to grow his business by diverting online traffic from rivals.
He said: “I am currently running a Google Adwords campaign targeting Amazon Web Store to Shopify conversions. Amazon is closing down their Web Store program and a lot of their customers want to switch to Shopify.
“Since we are a certified Shopify Partner, we thought we’d capitalise on this opportunity. It’s going great so far.”
When it comes to branding, over a quarter believed it was important to evolve their branding as they grew and even more felt that having the right branding helped to attract the kind of customers they wanted.
Fiona Mills said: “Branding is so much more than your logo or colour scheme, it’s how customers feel about your brand and what they associate with it. Being consistent with this across everything you do, from signage to social media, product labels to business cards and more, will help to ensure customers remember your brand and feel the way you want them to.”
At the heart of company marketing and branding is what Mark Wignall, managing partner at private equity firm Mobeus Equity, describes as the challenge of working in a “more competitive” and “a tougher landscape,” whereby entrepreneurs are aiming to develop a distinctive brand image which stands out to the targeted customers and clients from competitors.
Marketer Sujan Patel, co-founder of ContentMarketer.io, advises growing firms to focus on long term goals when building their marketing and sales strategies during their growth stage.
“When scaling, many founders focusing on ramping up their sales and marketing activities, but these are only short-term, tactical initiatives,” he said. “Creating a strong buyer market and building long-term demand is just as important to your overall success - if not more so.”
“As you begin to scale your business, it can be tempting to compete on price. You may think that if you can ramp up production, you can cut your price and still be profitable. While this works occasionally, competing on price more often results in a “race to the bottom,” both in terms of profit and quality. It’s far better to compete on quality, ingenuity and customer service than to position yourself as your industry’s low-cost provider.
“If you can sell your customers on the value you provide, you can keep prices reasonable without having to stress about eventual competition.”
When and how to grow
With so many difficult issues to assess, many business owners can often be left unsure of when to start investing time, effort and money into upscaling their company, often opting to “wait until we are ready”.
The report found that taking steps towards business growth typically happens after one to two years of trading for the majority of small businesses. But a quarter of those surveyed said they waited until they’d been trading for between three and four years.
Nevertheless, despite the common financial and marketing challenges, the new study shows businesses can develop their operations in a number of different ways, from offering new services to acquiring a rival.
For American-based firm Enterprise Rent-A-Car, the opening of new branches across the UK and Europe since 1994 has played a key role in growing its business and increasing its customer base.
Enterprise Rent-A-Car is a service business, and its main customers include businesses, who may require regular car rentals for their staff or visitors and individual customers, who may want to hire a car when they are on holiday or if their own vehicle has been involved in an accident.
The company has rapidly grown by opening ‘home/city’ branches located in areas close to long-term business partners, as well as to a large market for personal customers and at airport locations.
Combined with bold and eye-catching branding and signage, the placement of its operations in areas where large numbers of potential customers congregate, has allowed Enterprise to benefit from increased awareness of its services by using its premises to project a strong visual brand.
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