How to Grow from a Small to a Medium-Sized Business
If you’re a small business, operating in a dynamic marketplace, then planning where you will be in five or even three years’ time can be complicated. Organisations and the economic environments within which you operate can take unexpected turns. While the journey can be a confusing one, the key to success lies in knowing and understanding the size of the market and its demand for your product or service. But how do you ensure your company is ready to grow from a small to a medium-sized business? Eliminate the growing pains and maximise your chances of getting it right with these tips.
There’s a whole mass of metrics that you can draw on to help judge whether you are ready to grow from a small to a medium-sized business – profit and loss, are obviously, clear indicators of success. Revenue growth is a crucial factor, as it will help highlight how your existing approach is leading to the right results, in terms of both customer numbers and client satisfaction levels.
You will only know that your success is likely to continue if you assess every factor on a recurrent basis. Keeping customers, partners and employees happy requires a process of constant engagement. Make sure you have the tools to help your business execute on its plans, reduce costs, and increase efficiency and visibility.
Looking back can help, too. You can create a measure of success by looking over your shoulder and considering where the firm was six months ago, where it is now and where you would like to be in six months’ time.
As your business continues to grow, stick to your strategy and pay close attention to forecasting and risks. Your business will lose customers and, potentially, some big-ticket clients. The key is being able to absorb this loss and maintain cash flow.
Remember that three or five big client wins is probably all it would take to transform your operations completely and enable you to grow from a small to a medium-sized business. Such successes would also change your forward-looking plan. This kind of fluctuation means that micro-scale planning, with an element of agility and flexibility, is crucial for small firms looking to scale.
Prioritising customer success stories
The way that growing businesses operate is changing, particularly in the digital age. Traditional organisations are more likely to focus on sales with the finance director firmly fixed on numbers. While renewals are important, it is possible that they will only account for around a quarter of revenue from contracts in a traditional business.
In modern, SaaS-based organisations, the contracting model involves shorter terms and faster renewals. The split between sales and renewals in these businesses is much more likely to be a fifty-fifty split. In fact, renewals could account for as much as 80 or 90 percent of revenue in firms with a monthly subscription model.
In these circumstances, knowing what makes people more likely to renew is key. Your customer success story must begin at the start of the sales cycle – particularly as a small business, but also as your firm grows larger. A failure to focus on success will create high churn rates and unhappy customers that you will struggle to turn back onside.
When attempting to grow from a small to a medium-sized business, it is important not just to analyse what factors help close a deal. Instead, experts suggest you focus on the areas that will make your client successful, and track and trace delivery across the contract lifecycle. If your client is successful working with your business, then their continued custom is much more likely to be assured.
So, keep a sharp eye on the potential for success. Avoid clients that will be tough to onboard and which stray beyond the confines of your already tightly-defined delivery model. Outliers throw you off course, so listen to customer demands and think carefully about how your organisation will help clients be more successful now and in the future.
When do you stop being niche?
Cash flow, for any entrepreneurial executive, is king – so always ensure you establish an effective balance between an over-reliance on two or three major customers and the creation of an overly-wide client base that is resource-intensive to serve, both regarding cash and time.
When times are tough, it can be tempting to take a tangent and look for new business in a completely fresh area. However, trying something different can be expensive and take your attention away from the elements that helped your organisation grow in the first place. Before you diversify in order to grow from a small to a medium-sized business, return to your core proposition and hone your approach.
Looking to new areas can be a smart way to grow a business, but your initial idea – the niche that has allowed your organisation to grow – should be a productive seem. Businesses are more likely to grow successfully when they find new ways of exploiting their existing niche.
So, that might involve a move into new markets, both in terms of industries or geographies. Looking to expand through your existing way of working will be far easier, and more likely to succeed, than going off and attempting to create a new product or service.
This is not by any means an extensive list of all that it takes to grow from a small to a medium-sized business. Most markets are riddled with uncertainty and risk which is why so many fail to make it. Nevertheless, the elements set out above will allow you to build a solid foundation from which to develop a sustainable growth strategy that will maximise your chances of long-standing success.