Reaching £1m turnover is an important milestone for any business but it should also be a time to review and refresh. You started your company because you saw a gap in the market and had the vision and energy to attack it. Yet, as time goes by, it is easy to become so busy with the day-to-day running of the business that issues for the future go unaddressed. So what potential changes do you need to consider as you plan for the next £1m? Here are ten ideas.
1) Performance - Measure and improve. For example, not managing cashflow can lead to failures of even profitable businesses. As the saying goes: “Sales are for vanity, profits for sanity and cash is for reality.” Do you have enough cash to keep growing your business and what does your capital structure look like going forward?
2) Protection - Shareholder protection and agreements, key person and directors and officers’ cover may have been neglected in the launch excitement but should not be further delayed. “The challenge in doing this later is that businesses get more complex and emotion based when bigger sums of money are involved as they get larger. This can affect mindsets, so it is key to get these vital insurances set up now,” says Martin Brown, chief executive of business growth advisers Elephants Child.
3) Plan for the next milestones - Businesses can hit glass ceilings or brick walls at levels of turnover of say £1m, £3m, £5m, £10m and £20m. This is a good time to think about how to grow the business valuably to provide future exit options and what barriers are likely to be encountered along the way. Assess your leadership, people, processes and technology and work on the business.
4) Purpose - Simply making money is no longer a sufficient aim, businesses must have a sense of purpose to appeal to staff, customers, suppliers and external stakeholders. Spend time devising your company’s values, vision and what you stand for. What is it that you are really trying to achieve? What does your business do differently? How is it sustainable over the long-term?
5) Possibilities - You started a business because you saw an opportunity, but do you have the business knowledge to understand what is the art of possible? “You need to know where you can take your business,” says Martin. “How much can you grow it? Do you need to raise funds to do so? How are you going to build value in the business and then realise it?”
6) Product or service life cycle - Are you refreshing your original business concept and strategy to ensure they are still relevant and sufficient for today’s fast-changing world? Can you avoid a “Kodak moment” by making sure you foresee industry changes and constantly refine and improve?
7) People - Ensure that you are recruiting the right talent and providing them with the training and mentoring they need to move the business on. “As you grow your business, you’re going to need to achieve results through other people,” says Martin. “If you don’t carry forward the business culture or delegate or plan well, the person who started the business can actually become its biggest constraint.”
8) Partners - Do you have the best advisers to challenge you and the business going forward? Just because they got you to £1m turnover does not mean they are the best people to take you to the next milestone. Are their skills still relevant? If not, do you need somebody else?
9) Portfolio - Are you proactively managing the types of customers or clients that you are attracting? Are they still delivering value and profits for your business? Over the years, companies can collect suppliers and clients, but your business may need to not only grow existing clients and acquire new ones but also disengage from those that are no longer a good fit.
10) Passion - Do you still love the business you began? Is it your passion? If not, should you be doing something else?
The opinions expressed by third parties are their own and are not necessarily shared by St. James’s Place Wealth Management.