Growing your business: 4 winning strategies
A BDC study looks at key challenges entrepreneurs face in growing their businesses and presents four key strategies to overcome them.
BDC surveyed more than 1,000 managers of small and medium-sized businesses across Canada to get their views on growth. The results were quite eye-opening.
A large majority of the business managers have the desire to grow, regardless of whether they are currently growing or not. When asked how important growth was for a business, respondents to our survey gave an average rating of 7.1 out of 10. What’s more, 38% of respondents gave 10 out of 10.
The challenges to growth
While there are many benefits to growth, the business managers also identified challenges in achieving it. These included financial pressure, pressure on human resources, difficulty in overcoming fierce competition, and a lack of familiarity with new technology, market trends and competitors.
BDC asked the managers of small and medium-sized businesses to identify strategies to overcome these challenges. We also asked BDC business consultants to offer tips on how to carry out each of these strategies.
1. Be a client-centric business
A whopping 99% of the managers said having a good grasp of client needs and satisfying them is a decisive factor in ensuring their company’s growth.
To help you, BDC consultants offered these tips:
- First, you need to know your customers better. Where are they? Who are they? What are their values,
- To get to know them better, conduct research using secondary sources, such as reports or surveys, or conduct your own direct research based on interviews, focus groups and surveys.
- A good rule of thumb is that 80% of your sales will come from 20% of your customers. Develop an especially deep understanding of your best customers and cultivate their loyalty.
- Invest in a customer relationship management system to provide centralized access for your team to information on existing and potential customers.
2. Build your talent pool
Our survey indicates that managers of growing businesses pay special attention to managing HR. For 85% of them, this means providing better training to their employees, while 72% say hiring better qualified labour is a priority.
To put this strategy into action, our business consultants suggest doing the following:
- Develop an HR management plan that forecasts your staffing needs and covers such matters as how you’re going to retain and motivate employees.
- Assess your current employees’ skills to see where there are gaps, and develop training and recruitment strategies to fill them.
- Prepare clear job descriptions, performance objectives and appraisals to ensure your employees are productive and focused on giving their best every day.
3. Stay on top of your game, innovate
Our survey found eight out of 10 managers identified innovation as a key to their growth. Just like understanding and satisfying clients’ needs, innovation is one of the growth strategies used by respondents to our survey regardless of their level of growth, size or location.
To boost your company’s ability to innovate, our consultants have these tips:
- Ask for ideas and feedback from suppliers, clients and other stakeholders. You should also harness your employees’ creativity. They have intimate knowledge of your business and industry, and are often your best source of ideas.
- Develop an innovation strategy with the help of your team. It should cover improvements to your products and services, processes, marketing strategy, business model and supply chain. Remember to keep it up to date.
- Keep in mind that innovation doesn’t necessarily mean inventions or radical departures from your way of doing things. It also encompasses gradual improvements in products, processes and market approaches.
4. Invest to be the best
In many cases, growth depends on the resources invested in the business. So it’s not surprising that three out of four managers said they’ve focused on increasing production capacity by investing in facility expansions or new equipment and technology.
To get the most benefit from your investments, our business consultants recommend that you do the following:
- Carry out in-depth research on what’s available in the marketplace before you make a major investment.
- When investing in technology, opt for turnkey solutions rather than customized business applications. Custom-made solutions tend to be more expensive in the long run and lead to a degree of dependence on the supplier.
- Minimize the impact on your cash flow by using business loans rather than your everyday money to finance your growth investments. Opt for loans with suitable repayment terms that match the asset’s expected term of service.
For more information on growth and how to achieve it in your business, download the full report, SMEs and Growth: Challenges and Winning Strategies.