Four tips to add to your business growth strategy
This week, the latest inflation results are expected to breach the Reserve Bank’s upper target of 6%. To curb inflation (some say misguidedly), the Bank has already increased the repo rate by 75 basis points since January this year.
The rand remains stubbornly weak, hovering at over R15 to the US dollar.
Earlier in June, the RMB/BER Business Confidence index came in at 32 points, down from 36 points the previous quarter. “It reached the lowest level since the last quarter of 2009, mostly due to a fall in sales among retailers,” commented tradingeconomics.com. “Also, sentiment in building and wholesale trade sectors declined sharply.”
In a business environment such as this one, is it completely naïve to even try to adopt a business growth strategy?
Canadian business consultant Del Chatterson says no. Chatterson says that over his 30-year career he has come to realise that “small and medium-sized businesses can thrive regardless of economic conditions.”
If your company falls into this category, read on to discover four tips around how this can be done.
Business growth strategy tip #1: Diversify your customer base. At times when the economy is running thin, mitigate your risk by widening your customer base. If you are overly dependent on the income provided by two or three customers, you open your business up to risk at difficult times. A thriving business we know recently learned this the hard way.
“Everything just turned in a matter of three months,” said their MD. “We had no way of predicting that all four of our largest clients would cancel their contracts at the same time. It came as a huge surprise.” Pre-empt a situation like that by making sure your revenue comes in from several sources.
Business growth strategy tip #2: Give your best customers the red-carpet treatment. While you need to work on getting the ‘mix’ right, it’s time to make sure your biggest customers feel extra special. ““It’s easy to make the mistake of being distracted by the most persistent or annoying customers,” says Chatterson. “Your biggest customers are unlikely to be the ‘squeakiest wheel.’” So stay up late to meet their shipping deadlines, bend over backwards to make them smile, and make sure they’re aware that they’re your top priority.
Business growth strategy tip #3: Foster a positive corporate culture. If your business is going to grow in times like this, it will be garnering positive results in pretty negative circumstances. In order to do that, you’re going to need an army of staff with a ‘can-do’ attitude. Of course, that starts with vision and positivity at the top. But look out for the ‘bad apples’. One influential team member with a negative attitude can poison the group and affect morale. “If you can’t change people’s attitudes, you may have to change the people,” says Chatterson.
Business growth strategy tip #4: Keep an eye on your assets as well as your profits. Most entrepreneurs are very focused on managing the bottom line by monitoring sales, gross margin and expenses, Chatterson says. But they often ignore asset management, especially cash flow. The best way to manage growth in a slow economy is to keep an eye on asset and cash flow management to build net worth. The trick is to balance short-term and long-term needs with short and long-term sources of funds.
“If you foresee problems on the horizon, now is the time to talk to your bankers. Never surprise them with bad news.”
Growing your business during lean times means maintaining a positive attitude, mitigating your risk, making sure you retain your biggest clients and being smart about managing your assets. If you would like assistance with doing these things and more, contact The Finance Team. Our associates are highly qualified, insightful finance executives who can give you the competitive edge you need.