How to develop your growth plan
Read time: 3 minutes
Before 2008, Niagara Tools was doing well—but its growth had stagnated.
Demand was increasing for the metal-cutting tools the company specializes in, mostly for large automotive, aerospace and power generation companies in Ontario and the U.S. But sales at the St. Catharines, Ontario, company were not keeping pace.
“We weren’t experiencing growth,” President Paul Brodeur says. “We had fallen into complacency and hadn’t brought anything new to the table for our customers. We had to change.”
To make matters more difficult, customers were pushing for pricing concessions as more competitors entered the marketplace.
The problem, Brodeur realized, was that his business had become a “me-too” operation that wasn’t providing enough value-added service to customers.
Provide specialized products and services
Brodeur’s solution was to drastically alter his business model. Under the old model, the customer would design and create blueprints for the tools they wanted and hire Niagara Tools to make them.
Now, the emphasis was on being a one-stop shop—sending field engineers to visit clients and study their needs, and then designing and manufacturing the tools. The final step was to help customers install the tools and optimize their processes to improve profitability.
Brodeur made the decision to invest heavily in his business to get it ready for growth. He negotiated financing to buy high-tech equipment not used by competitors—to improve tool performance and delivery times significantly.
Sales take off
The changes helped Niagara Tools remain profitable during the 2008-2009 recession and laid a foundation for renewed growth
“If you don’t grow, you stand still and don’t progress,” Brodeur says. “Customers will recognize that and take their business somewhere else.”
Invest for growth
The decision to invest for growth is one of the most important milestones in the life of an entrepreneur. Yet, many entrepreneurs hesitate because they are worried about the risks involved in going for growth. And once they do ramp up, they often experience growing pains that can threaten the survival of their enterprise.
The solution to these challenges is to sit down and carefully plan your growth.
A common mistake is thinking: Let’s just get orders, and then we’ll figure out how to manage them.
Create a road map
Take time away from the daily grind with managers and key employees to create a plan. Be sure to cover each of the critical functions of your business. Consider what your requirements will be in each of these areas as you hit growth milestones and how you will meet them.
One key part of your road map will be a financial plan, which will include your sales forecasts, expenses, and expected profits. You’ll want to include three scenarios—pessimistic, optimistic, and probable—to assess your business risks and opportunities for success.
The financial plan will allow you to assess your financial needs in advance and line-up the right financing for your needs before you need it.
Meet your financial partners early
Niagara Tools had previously been largely self-financing. But Brodeur realized he needed outside financing for his plan to purchase state-of-the-art equipment.
The technology purchase was important to Brodeur’s growth vision. He also strategized with key staff, especially his sales team, to hone his vision for growth.
“We’re now much more of a value-added business,” Brodeur says. “And we’re on much more solid ground to grow.”