A decisive UK general election result has brought more certainty about the political landscape ahead for the next few years and could prompt entrepreneurs to be more confident around plans to grow their businesses. In this article, Martin Brown, founder of business advisors Elephants Child, provides five tips to help entrepreneurs take advantage of a growth market.
1. Plan to grow
“If you’re thinking about growing your business, it’s really important to commit those thoughts to a plan,” says Martin. “In doing that you need to stress-test all areas of your business – not only your core proposition but also back office functions like your IT and comms, systems and processes, KPIs, cashflow and structure. Ask yourself if those things can scale up. If they can’t, they will be constraints on your growth.
“Setting out both a business plan and operating plan for the next three years is absolutely critical to ensuring your business is set not only to grow but to grow and create value because that’s what is going to make it sustainable in the longer term.”
2. Capital structure
“A growth journey is going to bring different demands on your cash flow. You might have to buy stock, recruit people or invest in premises so capital structure is key. You must have working capital, so you have the scope for that growth,” says Martin.
“If you’re going to borrow, find the right kind of borrowing to suit your situation. But your finance approach could be anything from an overdraft to taking a term loan, using invoice discounting or selling some shares.
“Whatever way you choose to finance your growth, remember investors will expect you to have a business plan with a financial model that supports it. It’s amazing how many SMEs don’t have that.”
3. Where and what to grow
Martin’s third tip is to ask yourself if you want to grow your business in the domestic market or overseas? Also, will you be growing with your existing products or do you need to develop new products?
He adds: “Another question is whether your growth will be organic or through merger and acquisition (M&A). You should be teasing out the answers to all these questions in the strategic planning process. If you decide on growth through products, by going overseas or through M&A, then that takes longer, there’s a higher level of risk and you really need to plan how you go about it.”
4. Organisational structure and leadership style
According to Martin, not having your management team and structure in line with your strategy will be the “single largest barrier to growth”.
He adds: “You must have the right people in the right jobs, and clarity around roles, job descriptions and targets. Everyone needs to know where they fit on the growth journey. And the kind of leadership style you want is one that encourages growth through coaching and motivating your team.”
5. Be scalable – talent, systems & processes
Martin says: “You want skilled and motivated people who can help grow the business, but you also want systems that scale up with you, that will work whether you have one member of staff or 1,000.
“So, for example, you should have your IT and comms systems hosted in the cloud and able to grow as you add people, customers and transactions to your operations. That same ethos would apply to your accounting systems too and essentially all the other processes that are part of how you do business. If these elements can’t be ramped up, they’ll be a constraint on your ability to take advantage of a growth market.”
The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.