If you’ve run a business for some years, you may have noticed a trend. Your profits are great. Your cost of execution has remained steady and your margins are juicy. You’re not taking on new staff or making new capital purchases. But, despite the fact that your costs have held steady, you don’t have as much cash in the bank as you should. Your expansion efforts have also stalled.
Although your expenses may be the same, you can’t control environmental costs, supplier costs or inflation. More so, the skills you used to create your business, may not necessarily be the same ones that are required to scale it.
To scale an existing business, there are two things you can do:
Option 1: More of the same
Option 2: New products
Option 1 means squeezing more jobs from existing clients, extending an existing product to include more profitable features, or courting new customers. This may entail developing a branch network or opening new offices.
Option 2 on the other hand, entails developing entirely new products and services.
The first option means you must fight for market share with competitors. You must have better products, foster better relationships and deploy better marketing techniques. Sometimes, doing so may require a merger or acquisition.
The second option will require that you move out of your comfort zone, to create something new (especially if your industry is already saturated and there’s little room for organic growth).
Now, here’s the key. Whichever option you choose will require an upfront investment of time and resources. You will need to dedicate at least one staff to the new direction or venture. The thing is, it’s hard to generate new money when no one is thinking about it day and night; someone whose performance and remuneration depend on it.
You will soon discover that identifying the right driver for a new business initiative, is equally as important as developing ideas to generate new income. That ability to move from brainstorm to execution is what separates growth companies from fledgling enterprises.