Business "overnight success" stories—the venture that skyrockets from a kitchen-table project to millions in short order—seem to be everywhere. However, the truth is usually that fast growth is the result of excellent strategy, constant re-evaluation of core business areas, and careful reinvestment for growth.
"Specifically, business owners need to understand what I call their ‘Best and Highest Use.' It's a concept that effectively says, ‘Figure out what your company is best at doing, what they like doing, and what the marketplace has previously valued them for doing,'" says business growth consultant Andy Birol, founder of Birol Growth Consulting in Pittsburgh, Pennsylvania. Then, he adds, focus your investment of time and resources on those areas to accelerate the growth of your business.
The first step, says Terry Mackin, managing director of Generational Equity, a Dallas, Texas–based mergers and acquisitions consultancy, is to closely monitor cash flow and control costs, especially in areas that don't contribute to the core functions of your business. Many companies have failed during times of economic downturn and uncertainty because they were not vigilant in cutting and controlling costs in proportion to the downturn in their businesses. As your business grows, you may find that some departments or sectors are duplicating efforts or that streamlining some functions may yield savings and efficiency, adds Birol. For example, moving all print production efforts through one central location can help your company negotiate better volume discounts than having varied accounts from different departments. As you determine which areas of your business are most profitable or yield the greatest results, adjust your annual budgets to support those key areas.
As they emerge from a difficult economic climate, businesses should also be looking at capital investments they have been delaying, says Robert S. Lee, business banking equipment finance executive at Banc of America Leasing & Capital, LLC. Many companies have been conservative about making such investments or taking on new debt. However, he adds, strategic acquisition or leasing of equipment can improve efficiency and maximize productivity, often yielding significant savings, which can then be reinvested into the business for further growth. Lee helps guide his clients through the process of choosing whether to lease or purchase equipment, based on the long-term objectives of the business, the type of equipment to be acquired and the business's federal income tax position, among other factors.
"It is time to look at what capital equipment your business needs to take advantage of growth opportunities as economic conditions improve. Investments made now can give your business an edge over companies that further delay capital investments," he notes.
Most businesses need to make their technology and equipment investment a strategic part of their growth plan, says Mackin. Technology can be an important factor in preserving resources, managing inventory and materials, and automating processes to reduce waste and enhance productivity, and it can even help bolster a business's valuation. Automating as many functions as possible allows the time and salaries once spent on those areas to be redirected to other areas that will enhance the product or service, increase sales, or improve customer satisfaction—all areas that will further the business's expansion. "One of the first things buyers do when they come in and look at a business is to look at the technology," he says.
Birol says other key investments include market research and customer service. Having a true, objective understanding of the marketplace and what your customers value about your business is essential in order to discover your business's Best and Highest Use, he says. However, growing businesses may lose sight of their levels of service or the reasons customers rely on them. Investing time and resources into a comprehensive customer relationship management (CRM) system and evaluating sales and market data to uncover trends are critical as businesses grow. This data mining can predict market opportunities and help the business find areas that customers dislike, providing key information for the business to improve and become stronger. In addition, investing in the people and resources you need to provide top-notch customer service is essential, since keeping customers happy and engaged with your business costs far less, in most cases, than acquiring a new customer, he says.
By focusing on the core of the business, cutting non-essential expenses, and reinvesting in core functions, businesses can position themselves for growth even in difficult economic times, says Birol. And that repositioning will make them better able than their competition to seize growth opportunities when market conditions improve.