When you start your business it’s all about growth as there is nothing else to really focus on, right? On most occasions, it feels as if there is this endless outflow of cash from your bank account! But then suddenly (or so it seems), sales start coming through and the wheels begin to turn. Before you know it, you’re three to four years in and revenue has grown significantly. Time on the other hand becomes a scarce commodity and eventually you start asking those questions: What am I doing this for? What is the end game here? What is the difference between running my business or working as an employee in a stressful job?
All cliches I know and even when a few more years go by, I hear you say: Yes, I have hired more people now, invested in technology platforms and done the digital and social media marketing thing (just like everybody else!). Oh wait….and you engaged a business coach, who promised a cookie-cutter way of increasing revenue 100 times and profit of 10 times blah blah blah……(I don’t know, maybe it did eventuate, but if you reading this I’m guessing it didn’t quite work out that way).
The point I’m trying to make here is that you have to go a little deeper when exploring whether you have truly invested enough in growing your business for the long term. The alternative is merely strengthening your lifestyle business, which is by no means a lesser endeavour, however many I know or come across get to a point where they can see the pathway to growth, and which also brings into play the various exit options down the line.
To really answer this question and give it the objective analysis it deserves, here are three key dimensions that require some further digging and thoughtful contemplation. If what you uncover is somewhat confronting, that’s a good thing and take heed.
Financial Analysis
Review your previous year financial statements with your accountant or business advisor. Go through your profit and loss and balance sheet line by line and do a thorough analysis on key profitability, liquidity and gearing ratios. The numbers never lie and will often tell you a story. This is where benchmarking comes in, but again it is never a one size fits all approach. For example, it is not uncommon to work towards a 20-30% net profit margin, but of course it all depends on which industry you are in. The more important thing to understand is your appetite for risk and to try and objectively assess whether your profit margin is too high and therefore stifling potential growth. Pay particular attention to measuring key expenses to revenue such as marketing and wages. Are you being too cautious or conservative if growth is your main objective?
Recruitment Process
Learn to identify your strengths and weaknesses and do not be afraid to actively seek out those that may have more potential to grow the business than you can on your own or with your current set up. Think about gaps in skills that you are lacking. Even more important is to find the right cultural fit and someone who aligns to your company values. Do the internal work first before you go on a hiring spree. Partner with the right recruitment experts who can become one of your future growth partners. Do not forget that recruiting well is just the first part. Make sure you invest as much (if not more) in retaining key talent by offering professional development opportunities and rewarding career pathways. Long story short, invest appropriately in this key area. Expensive is cheap and cheap is expensive is all I need to say on this.
Self-Development
Getting the above dimensions right requires a consistent approach to your own self mastery as the commander and chief. Learning to make tough decisions that adequately invest for growth is the best way to expedite the development of your leadership capabilities. It will no doubt take you out of your comfort zone, push boundaries and help you confront some of your demons. It will open your mind, allow you to think bigger and grow both personally and professionally. This will not happen organically or just by going through the motions. In my opinion, it is critically important to be proactive in your own self-development and recognise what you need to focus on in order to take those necessary steps so you can take the business to the next level. More often than not, some kind of mentoring or coaching intervention is helpful in fast-tracking this process.
This short article is only the starting point to at least allow you to look in the mirror and make an honest assessment on whether you are deeply committed to growing your business over the long term. Again, and in my view, to grow is to take risk and to get the rewards, you need to invest!