Growth is the goal many businesses are striving towards. Even businesses that don’t want to spread across countries and become the next Amazon or Netflix need to think about growth simply in order to remain stable. Even if you merely want to run one modest branch of a business in one small town, you need to think about how you can grow by adding different products, services or pricing structures to ensure you don’t lose customers to other businesses that are providing those things.
Growth, while an essential, is not an unalloyed good. It comes with risks, and if you want to grow safely, you need to be aware of those risks so you can avoid them. While growth strategy consultants can give you high quality insight into the challenges your specific business faces, today we’re taking a look at some general principles you should follow to limit the risk of growth.
A business thrives on a coherent, well communicated brand. A brand is much more than the conscious ‘branding’ you may have had a designer complete for you: it’s the personal identity customers create for your brand out of all the different interaction they have with your company: browsing your stock, asking for help, seeing an advert in a magazine (and the magazine they see it in), calling a helpline and more. It’s important to understand that you can’t directly decide what your brand is like: your customers make your brand. All you can do is hand them the ingredients.
As an example, think about Marks and Spencers. Their adverts are encouraging customers to build an image of them as a premium brand – and for a proportion of the audience that works very well. But for others exactly the same adverts look smug, foolish or exclusive. The meaning is created by your customers.
Unstructured or poorly considered growth hands your audience a random handful of ingredients and asks them to make a person out of it. As with Dr Frankenstein, this doesn’t always lead to attractive results . You need to start by thinking about the sort of brand you want to build, and make sure your decisions give your audience the ingredients to build it.
All growth requires money. All the ways you have to fund that growth comes with its own risks. If you’re able to take money from your business savings you’re able to fund projects without taking on debt or opening up your business to outside influence, but it may leave you exposed if you have additional surprise expenses.
Taking a bank loan leaves your assets at risk if your attempt at growth doesn’t show the returns you project and you’r unable to pay. Looking for investor funding means you have take on their influence as well as their cash – and if you’re someone who’s got into business because you value your independence, this could force you into unwelcome compromises.
When you’re planning to expand, make sure you have a realistic look at what it’s going to cost you, what you can sustain and put some checks in place to ensure you’re ready for the financial strain that initial investment, as well as overruns and repayments.