Straipsniai
Every business starts with a few customers or orders. Some companies are successful; others fail because of a poor business strategy. Some companies remain at a certain level, while others grow into large and profitable businesses. This article discusses certain factors that make a business grow. One such factor is understanding the difference between business growth and expansion.
Growth and expansion
A business grows when revenue increases simultaneously with expenses increase (for example, by increasing the number of customers to whom you sell more products or when you hire more employees to increase the number of services you provide). In contrast, the business expands when the aim is to increase the income quickly, which gradually increases the costs, income and profit margin.
The ultimate goal in business, whether growing or expanding, is to achieve revenue growth, and the goals of business owners often dictate how they achieve this. Those for whom business is a way of life tend to follow a growth strategy. Those who want to sell it after creating a business will also look for ways to create an expanding business model. It will not only look like a fast-growing and successful business, but it will also demonstrate further opportunities for business development to potential buyers (especially in the case of private capital).
Business growth is driven by sales and marketing, cost reduction and productive work with almost no investment in infrastructure. However, various technologies are also playing an important role in transforming business models that may not traditionally be seen as scalable and where technology significantly reduces labour and infrastructure costs. This was caused by the intensifying transition to business models based on IT technologies and the cloud.
Growth strategies
While reputation and word-of-mouth can be very important in attracting new customers, targeted sales and active marketing will help businesses reach more customers. Geographical expansion nationwide or expanding into new international markets is a well-known path for companies in many sectors. Businesses can also grow by expanding their existing range of products or services.
A carefully considered and targeted merger and or acquisition of other companies can be a perfect way to grow quickly and create greater value.
The foundations of growth
It is important for companies to be well prepared for growth and to be able to cope with the rapidly growing needs of customers and clients and negative processes that will inevitably emerge (for example, the quality of customer service or communication between staff may deteriorate).
To fully prepare for growth, you need to implement certain things first. Otherwise, you risk losing control of the most important processes. These kinds of things are very difficult to fix once the problems start to surface.
The key to growth is proper management. Its essence is to assemble a team of people to whom you can increasingly delegate daily tasks, leaving you to focus on the “big picture” and devote all your efforts to growing the business. To retain the best talent, you also need to take care of it and motivate people by offering them the right incentive programs. Finally, seek advice in areas where you have no experience yourself. This will help you find the optimal solution to a difficult situation.
To cope with the rapidly growing volume of transactions, the company must install appropriate process automation systems. This affects not only the core sales and purchasing processes, IT infrastructure but also financial and accounting systems and software.
Financing
Both planning for growth and implementing a growth strategy require funding. While some companies may have sufficient working capital and cash to fund their own growth, others may need additional funds. Accounts Payable Factoring is a frequently used tool for this. When expanding a business, you can use a bank loan or borrow from other creditors, including private equity lenders, to accumulate additional capital. Having the right financier will also allow you to take advantage of the experience of the latter and successfully realize your growth ambitions.
