Know+Do is a social values business that provides practical, problem solving support to staffing, strategy and systems related issues. Bernard Clarke, from Know+Do Ltd & partner of the Business Growth Hub let us know his three steps to profitable growth.
The business community in Greater Manchester continues to deliver optimism and opportunities for growth. All indications are that 2015 is a year when companies can seek to expand and take advantage of an improving economic climate.
In business terms we are often told growth is good. For a business leader though the key question to ask oneself is not ‘Should the business grow?’ but ‘WHY should the business grow?’ After all, turnover is vanity; profit is sanity. Growth for growth’s sake does not always lead to rising profit margins. Equally, not everyone’s measure of success is in expanding the scale of their financial value. Each business leader can and should choose their own definition of success.
At Know and Do we suggest leaders work through three quick tests of their growth expectations. A brief investment in planning at the start can save a business great deal of time and money in the long run.
Step 1: What is the purpose of growing? Why do you want to get bigger? Can you list your motivations or reasons for championing growth? Is it to respond to strategic opportunities? Would growth provide an evolution of your business? Perhaps growth is a way of protecting financial security? Does it fit with your expectations of business? We suggest listing up to 3 key points for your purpose to give your plans a clear focus.
Step 2: What is the payoff you seek from growth? Can you set markers for achievement and progress? Growth is a relative term and your perspectives will change as you progress your plans. Setting immediate (1-3 month), medium term (3 – 12 months) and longer term (12 months plus) goals for your business will provide a framework for assessing your actions. Ensuring you have considered ambitions that cover profitability, cash-flow and the business model you’ll create, will provide a rounded picture of your potential growth.
Experience shows us that many business owners find this step can be the hardest. If you cannot complete targets with a rationale in mind it would suggest further thinking is needed at the step 1 stage; (why do you want growth?) If needed, take some time to consult those you trust – colleagues, peers, experienced professionals – to expound your ‘purpose’ and shape your ‘payoff’ expectations.
Step 3: This is the final part but the step most people leap into first. Without step 1 and 2, your plans will be led by the winds of chance not a charted purpose. This is now the time to consider the process of growth. How you will achieve the change? What business structure suits best? Who (skills, knowledge and experience) and what (equipment, premises, materials) will be needed to create growth? Setting out an action plan to allocate sufficient finance, time and resources to drive to your plans forward will be needed.
The beauty of being a business leader is you get to complete these steps in your own time, style and manner. They do not have to be extensive but they do form a coherent starting point. If you set the detail down – and we always recommend making it real by putting your thoughts onto paper (as a first stage bullet point thoughts before you work the ideas further) – you can then begin the job of persuading others to join you as you need. Remember, to grow well; first know your purpose, second set down your payoff, and lastly then plan the best process and action it.