How to address business growth barriers
By Jake Standing, Kreston Reeves
Many business owners talk about ambitions for their company to grow, yet there are many barriers to growth.
At Kreston Reeves we recently conducted a survey – Going for Growth – suggesting that the main barriers to growth plans are access to skills and labour, access to funding, increased competitor activity, and business uncertainty.
However, the business landscape is ever changing. In order to address barriers to business growth plans, first we must define and understand them. Only then can we start addressing the most pressing challenges and look to thrive.
What is ‘growth’?
I doubt anyone will argue that companies like Tesla or WeWork are anything but growing, however their results could suggest to some that with continued losses they are not sustainable. These are not isolated cases – many ‘unicorns’ (privately held startups valued at over $1bn) are not profitable, but still highly sought after by investors. One of the drivers for these lofty valuations is because the business has clear purpose and direction.
Even in businesses that are not ‘Blitzscaling’, growth must be well defined and aligned with the vision of the company. Why does your business exist, and what is the business aiming to build for the future?
There may also be other growth areas which have not been considered – perhaps your business is more focussed on how many happy customers you have, or how much resource has been donated to charitable and community activities? Growth needs to be defined in the context of your business before it can truly be assessed as to what constitutes a barrier.
Once a vision for growth has been determined, it should be embedded in
in the ethos of your business. This should be accompanied by a fluid business plan, which looks at the future state of the business, not just the business today. Barriers to growth are likely to be highlighted within various questions raised across the ”5 P’s” – People, Process, Product, Place and Projections.
People – Most barriers to growth occur where a business does not have the right people, structure or training in place, and you spend more time working in your business rather than on it. This can strangle growth and may compromise the ability to spot gaps in the skillset of your team.
With access to skills and labour being a key barrier, it would be worth investigating what your business has done to integrate with local universities and colleges. This can help students identify what career opportunities are available, as well as enhancing business teams with bright, innovative ideas and designs.
Process – Growing businesses can easily become too big for the management processes and systems initially set up. New business growth then runs the risk of being delivered with poor quality and at a high cost. Ensuring that your process is lean and efficient gives your business a foundation to grow whilst maintaining great customer service and approval ratings. It will also help with timely and accurate management information which will be crucial for external funders
Product – Product saturation can be a ceiling for growth, and if your business is not able to differentiate to grab market share from competitors, then a complimentary product may be the answer. Developing the end to end value proposition and the problem you solve for your customers is a good driver to kickstart growth with different revenue streams, potentially in different industries.
Place – Expanding overseas can be attractive for businesses looking to grow, but careful planning should be undertaken as the risks of trading overseas are unknown for most. Strategic partnerships can assist here, acting as an opportunity to gain insight into new markets, or even to share risk of growing in these new jurisdictions.
Projections – Alongside any business plan will be a set of financial projections, which should be measured against to ascertain progress and adjustment when off course. These should also focus on funding gaps expected within a high growth business, not just for tomorrow, but for the future (say 3-5 years plan).
Access to funding is often cited as a major barrier to business growth but can often be a bit misleading. One of the key issues is that applications are not accompanied by a robust plan on how the growth is going to materialise and the building blocks that have been put in place already to facilitate this.
So how do you address business growth barriers? Get your leadership team together and revisit your vision for the business, identify your main barriers, and focus on ensuring that you have the best people around you – motivated to find the optimal solution.
It may be that those barriers to growth for your business, may not be barriers after all.
Jake Standing is a Partner at accountants, business and financial advisers Kreston Reeves. For further information he can be reached by email [email protected].