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In December we were fortunate enough to win the Scenic Rim Business Excellence Award for ‘Business Growth’ |
In December we were fortunate enough to win the Scenic Rim Business Excellence Award for ‘Business Growth’ so it seems fitting that we write this article about growth.
Having helped many other businesses to grow over the years our entry into the business awards was an opportunity to examine our own business and its achievements.
We have been fortunate enough (with a lot of hard work!) to experience growth in terms of profit, client numbers, number of staff and their expertise in various areas and consequently grow the services we offer to our valued clients.
Growth businesses are exciting businesses! Complacency and apathy are often the main barriers to growth.
You will need commitment and drive, the ability to think ‘outside of the square’, willingness to delegate as your business expands and the skills to manage the whole growth process effectively.
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| Growth is not only increasing turnover or profit. Growth has many dimensions – increasing customer base, increasing spend per customer, developing new products, taking on new staff, acquiring new knowledge or skills, conducting research and development or exporting to overseas markets. |
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Growth is all about taking your business to the next level. You might think of growth as increasing turnover or profit.
However, growth has many dimensions – increasing customer base, increasing spend per customer, developing new products, taking on new staff, acquiring new knowledge or skills, conducting research and development or exporting to overseas markets.
A good starting point when considering growth is to revert back to any business plan you had when you first started your business.
Have you achieved all you hoped for? What have been your core strengths and weaknesses? What is your grand plan? Where would you like your business to go? How are you going financially? How well do you know your numbers – historically, now, for the future?
With a grand plan in mind it’s time to get down to specifics. For example, an overall growth strategy to ‘increase sales’ becomes specific if you attach a time frame, a percentage increase or attach a dollar figure.
Let’s say you operate a clothing shop, you decide that your growth plan is to increase sales by 20% over the next two years.
Now you have quantified your goals then it’s time to plan a strategy to reach the goals. You have identified that you have a range of ladies hats that are really popular. In fact, you have been fielding phone enquiries from existing customers who want to buy more from you.
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You analyse that the clothing shop is working well; it virtually runs by itself as your staff are well trained and experienced. You identify that your growth mission is to develop a niche market for hats. |
These enquires come thick and fast during racing carnival season but you also identify that you could maintain a steady stream of sales during the year for any number of special events if you could have stock available.
You analyse that the clothing shop is working well; it virtually runs by itself as your staff are well trained and experienced. You identify that your growth mission is to develop a niche market for hats.
Back to the numbers – you now need to crunch some expense figures. Typically advertising and marketing expenses will increase. Will you increase your sales in-store or is online a real possibility? Will you need extra storage space? What about postage and packaging? Do you need extra staff?
You do some research and discover that you can buy your core product a lot cheaper if you buy in bulk and outsource sewing and decoration. However this involves a large outlay, you may need to get finance.
The numbers don’t stop there, with finance in place you are ready to commit to your first order. Have you established what your selling prices are going to be for your new hat range? You will need to establish mark ups, discounts and prices. Do you know your break-even point?
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| Your accountant can provide advice, discover opportunities, assist with planning, customise solutions, establish an operating structure, minimise risk factors and help you grow your business to its potential. |
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You know there is a market for your product overseas. How do you go about export? How do I trade effectively across multiple currencies? How do I manage foreign exchange risk?
Six months down the track you’ve made stacks of money, your hats are really taking off and you really wish you had spoken to your accountant sooner.
June 30 is looming and you realise that you forgot to think about the likely tax payable on the huge profits you have made. Maybe this should all have been structured as a company?
The moral of the story is that growth really is a numbers game. If you are looking to grow your business, then consult your accountant from the outset.
Your accountant can provide advice, discover opportunities, assist with planning, customise solutions, establish an operating structure, minimise risk factors and help you grow your business to its potential.
This article is presented in summary form as a guide only. It should not be relied on as a substitute for detailed advice or solely as the basis for making business or investment decisions.
Images from Microsoft Office.