Expansion Plans l Business Plans l Exit Planning l Business Valuations
Expansion Growth Plans
Exciting, yes - but at the same time growth can make good business sense - better brand recognition, building value in the business for employees and customers, offering a wider range of products and services to a larger geographical market, and creating "economies of scale."Rationalizing the rewards of a bigger business means tuning up your business plan writing skills again. You will need to update those spreadsheets, recraft your marketing plan and strategize an expansion implementation plan.
You will also need to carefully weigh the risks and rewards for growth. Some of the steps in your analysis are outlined in this section. Your lawyer and accountant will need to be consulted. Perhaps you don't have to figure everything out from scratch. Look to a business in your industry for best practices and draw on knowledge of others that have gone before you.
So how do you Gain a Business Advantage from Expansion ?
1. Build a Family Dynasty and Grow Community Self-Sufficiency.
Family pride, job relevance for family members, and building a business dynasty for not just your family, but for other families in your community as well, are a great reason for growth. Growth of a business, especially in a small community, can be seen as community economic development.
2. Build business value by dominating a market niche.
Business growth may garner your business the advantage it needs to be a leader in a market niche. You can move into new geographic markets, acquire more customers or provide the next level of service to your present customers - perhaps, a service they have been asking you for. Growing your brand brings value to your business and quality to your customers. Both are important in creating goodwill in the marketplace.
3. Attract and Retain Good Employees.
Employees are the new "green" in business, and the excitement of growth offers the potential for career challenge that inspire skilled employees. Growing businesses offer change and the need to acquire new knowledge - both something that younger employees seek and the global economy demands.
4. Land the major clients that in turn lead to more financial support from lenders.
Landing a major client or contract can give your business the cachet that it needs to get others to follow. As you build your resume financiers will take you more seriously, though they may consider you more risk too. Your larger size will increase your marketplace presence and strength.
5. Achieve economies of scale.
The age old concept in business is economies of scale. This means that bigger businesses achieve lower costs per unit and stretch administration dollars over a larger product line: marketing, professional fees, insurance and banking charges, to name a few. This economy of scale contributes to having more money for R&D, sponsorhips, employee training and education, investment in new technology and creating more productivity out of employees.
The Elements of Growth:
If you do not have all the above going for you, determine how to get it by gathering your management team and analyzing each area of your company for strengths and weaknesses: marketing, sales, production, technology, human resources, customer service, etc.
Exciting, yes - but at the same time growth can make good business sense - better brand recognition, building value in the business for employees and customers, offering a wider range of products and services to a larger geographical market, and creating "economies of scale."Rationalizing the rewards of a bigger business means tuning up your business plan writing skills again. You will need to update those spreadsheets, recraft your marketing plan and strategize an expansion implementation plan.
You will also need to carefully weigh the risks and rewards for growth. Some of the steps in your analysis are outlined in this section. Your lawyer and accountant will need to be consulted. Perhaps you don't have to figure everything out from scratch. Look to a business in your industry for best practices and draw on knowledge of others that have gone before you.
So how do you Gain a Business Advantage from Expansion ?
1. Build a Family Dynasty and Grow Community Self-Sufficiency.
Family pride, job relevance for family members, and building a business dynasty for not just your family, but for other families in your community as well, are a great reason for growth. Growth of a business, especially in a small community, can be seen as community economic development.
2. Build business value by dominating a market niche.
Business growth may garner your business the advantage it needs to be a leader in a market niche. You can move into new geographic markets, acquire more customers or provide the next level of service to your present customers - perhaps, a service they have been asking you for. Growing your brand brings value to your business and quality to your customers. Both are important in creating goodwill in the marketplace.
3. Attract and Retain Good Employees.
Employees are the new "green" in business, and the excitement of growth offers the potential for career challenge that inspire skilled employees. Growing businesses offer change and the need to acquire new knowledge - both something that younger employees seek and the global economy demands.
4. Land the major clients that in turn lead to more financial support from lenders.
Landing a major client or contract can give your business the cachet that it needs to get others to follow. As you build your resume financiers will take you more seriously, though they may consider you more risk too. Your larger size will increase your marketplace presence and strength.
5. Achieve economies of scale.
The age old concept in business is economies of scale. This means that bigger businesses achieve lower costs per unit and stretch administration dollars over a larger product line: marketing, professional fees, insurance and banking charges, to name a few. This economy of scale contributes to having more money for R&D, sponsorhips, employee training and education, investment in new technology and creating more productivity out of employees.
The Elements of Growth:
- Can-do culture of innovation and success
- Skilled and motivated team of employees with training plans in place
- Realistic plan with achievable targets along the way
- Enthusiastic management team with a variety of complementary skills
- Organizational structure with procedures that are simple and meaningfully defined
- Leadership ability and the ability to communicate it.
If you do not have all the above going for you, determine how to get it by gathering your management team and analyzing each area of your company for strengths and weaknesses: marketing, sales, production, technology, human resources, customer service, etc.
Strengths (Internal to Organization)
- What are we doing especially well?
- What resources do we have that other businesses don't have?
- What are our key competitive advantages?
Weaknesses (Internal to Organization)
- What do we do poorly?
- What activities detract from what we do best?
- Where can we improve?
Opportunities (External Environment)
- What opportunities exist for our business?
- What trends face our industry?
- What changes are occurring with our customers, i.e. age, spending habits, values, residences?
- What changes are coming to our industry's regulatory environment?
Threats (External Environment)
- What obstacles do we face?
- Are there new competitors entering the marketplace and what is their strategy?
- Is there a threat from planned regulatory change?
- Is there a threat from global competitors?
A few steps to keep in mind when considering expansion
1. The Flat Organization. Traditional organizations, where divisions along the chain of production are aided by support units.. As they grow organizations find they can benefit by decentralizing into semi-autonomous units (i.e. Toyota Management System) that manage individual plants, products, lines of business with parallel support operations for HR, purchasing and so on. Perhaps you are a five person shop, but the same ideal of cross-functional teams can lead to better efficiency than under an all powerful leader. Providing your managers with autonomy to make decisions within the parameters of the organization's mission, goals and strategy.
2. Communications are Key. Removing the barriers to communication are more likely in a flatter organization. Information flows more easily across self-managed units with some degree of cross -functional individual responsibility. In this way knowledge sharing, flexibility and speed of response to change are maximized.
3. Delegate. Growth is not possible if you (the business owner or entrepreneur) are still doing everything. One of the most necessary skills of management is delegation. Take your delegating to the next level:
- You are delegating mission-critical tasks that you once did yourself.
- You delegate tasks that you once did better and faster yourself.
- You set up reporting stages and mentorship reports for employees that have been assigned complicated tasks that you once handled so that they can accomplish them successfully.
- You determine which tasks to delegate consciously while deciding how your time is best spent, so that task is not just delegated simply because it remains undone.
- You give your management teams autonomous decision-making and spending authority, either individually or as a group.
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