Why so many businesses don’t grow
Lots of people have great ideas for businesses.
Lots of people start new businesses.
Not many grow them into thriving enterprises that provide employment, and contribute significantly to the economy of the country.
Too many people spend all their time working IN their business and hardly any time at all working ON it.
There’s nothing wrong with “lifestyle” businesses if that’s what you set out to achieve but so many people set out with different aims: to build a business that can exist without them; that can be sold; that won’t die when they retire; that will provide them with a pension; that provides other people with a good living; that is more than simply swapping their time for money.
A good idea is not enough to grow a great company.
Being great at what you do does not mean that you have a great company.
Companies consist of three main things:
Product + Process + People
Many businesses have a good product and great people but it’s the processes that allow them to grow.
This means that any job does not rely on just one person being able to do it.
Invest as much in the processes as you do in the product and the people.
Poor pricing is what keeps most businesses small.
Too many new businesses think they have to compete on price in order to get into the market. This is only true if everything else you have to offer is unremarkable and will only work if your whole business model is based on very small margins.
Keeping control of cash flow and understanding management accounts is probably THE most important factor in growing a business.
Money allows you to take the right business decisions at the right time but often the biggest decision that needs to be made isn’t a financial one but “Are you the right person to run your business?” Just because you started it doesn’t mean you have the right skills or temperament to do the day to day work of managing it.
If your aim is to grow a business rather than create a job for yourself, assuming that you already have a great idea, these are the top tips to make it work:
- Get enough capital before you start. Working just to cover your own wages is not a business.
- Estimate what you need and how long it will take to turn a profit and then double it.
- Don’t do any job that you can hire someone else to do better or quicker.
- Understand the finances of how a business works. It’s the most important job.
- Invest in processes so that no one person is irreplaceable – especially you.
If you are frustrated because your business isn’t growing as you’d like it to, lets have a chat. Sometimes a fresh perspective finds simple solutions that you are too close to see.