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Growing Your Business - by Kelly Deis

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Kelly Deis owns Turning Point Financial, a management consulting firm offering strategy, finance and operations consulting services to local businesses.  She is also a volunteer mentor for Accelerate Kitsap, a nonprofit business mentoring organization that helps local business owners grow their companies. Accelerate Kitsap mentors are experienced business and professional people who volunteer their time to help entrepreneurs solve problems and find ways to take advantage of new opportunities. You can learn more at AccelerateKitsap.org. 

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Growing Your Business - by Kelly Deis

  1. 1. 3 Essential Steps WhenIt’s Time To Grow Your BusinessBy Kelly Deis, management consultant and volunteer mentor for Accelerate Kitsap1. Decide to GrowShould you grow your business? It is a simple question with an assumed answer. Theanswer is, of course, is that you should want (some will say need) to grow. I am not surethe answer is quite so simple. Growth takes time, energy and money. And, there areinherent risks – if you are not successful, some costs may not be retrieved. And, if theplan is not well executed, it can take focus away from your existing business.If your business is well-established, has a loyal customer base, is reasonably protectedfrom the competition, profitable and affords you’re the lifestyle you have sought (both interms of discretionary income and time) then think hard before you take on anexpansion strategy. Make sure you understand what you want to achieve by growing.There are good reasons to grow a business. You might need the additional revenue tooffset established (fixed) costs required to run the existing business, such as IT,accounting, rent and the like. If the incremental sales don’t come with additional costs,then most of the revenue will fall to the bottom-line. An example of this would beincreasing retail sales without adding staff or store hours.You might believe that you need to establish critical mass in your particular marketplaceto defend against potential competition or to entrench yourself in the market. If you havesignificant market presence and are perceived to deliver high value – customers willstart to find you. There is a lot of value to being ubiquitous!You might have investors or a board that demand ever-increasing top-line and bottom-line growth. Or, perhaps you want to sell the business in the future. Investors andpotential buyers place a lot of value on growth (or the potential for growth).Lastly, it is simple human nature to want to be bigger and better. We all take pride inwhat we do – and for some that means employing a certain number of people, making acertain amount of money or having an undeniable market presence.So, take a step back and decide if growth is something you even want to consider. Andif it is, know your motivations – strategically, financially and emotionally – beforeembarking on an expansion plan. It is always best to plan with the end in sight.
  2. 2. 2. Identify the OpportunityThe first step in growing your business is to identify where your most likely opportunityfor additional revenue might be. There are several possibilities you can consider, all withvarying levels of risks, effort, cost and potential rewards. Starting with the strategies withthe least amount of risk (and growth potential), they are:a) Sell More to Your Current CustomersThe strategy with the least risk, cost and level of effort is simply to sell more of thecurrent product to existing customers. If you own a café, it might mean selling a muffinto the customer that generally only purchases a latte. Or, perhaps you can identify newways for your customers to use your product – like turning baking soda into adeodorizer for their refrigeratorb) Expand your MarketThe next strategy is to sell more of your current product in an adjacent market – such asanother city or state. If you are a retailer, that might mean opening sister store(s) innearby towns or malls. This strategy is a bit riskier than the first in that there areadditional costs to enter the market and increased management required to oversee thenew territories.c) Offer New Products or ServicesThis strategy entails offering new products to new and existing customers. For instance,If you are a manufacturer of wood doors, perhaps you can extend your manufacturingcapability to include garage doors. It is far less risky to sell new products to existingcustomers rather than developing new products and selling to a new market.d) Develop Additional Sales ChannelsThis strategy involves accessing customers in new ways. For example, if youmanufacture consumer products, you might expand your market through the internet oraccess additional distributors. This strategy is risky in that it requires accessing newchannels or markets that you may not have any prior knowledge.3. Make and Execute a PlanEach of the growth strategies described above requires some amount of risk,uncertainty, cost and effort. It is best to start with the least risky strategy and expand intoother strategies from there. If possible, test the market first before fully committing.
  3. 3. Consider your expansion strategy as if you were starting a new business and apply thesame rigor. It will require, after all, a certain amount of investment and on-going costand management. Hopefully, in return it will produce enough revenue to give you anadequate return on investment.Choosing to grow your business is not only a strategic and financial decision – it is alsoa personal one. Sometimes the decision to grow is not an option – current revenues justsimply don’t support the cost structure. Or, it is a defensive play – if you don’t expand tofill a vacuum, then a competitor will, thus jeopardizing your current position. Or, it is partof a larger strategy – maximizing value of the entity so you can sell the company andenjoy a comfortable retirement. Or, perhaps you decide to grow just because you seethe opportunity. Or perhaps you decide not to grow - the business is prospering, has aloyal customer base and you are content with your lifestyle.In any case – be thoughtful. If you decide to grow, determine the best strategy for youand your business. Then, make and execute your plan.------------------------------------Kelly Deis owns Turning Point Financial, a management consulting firm offeringstrategy, finance and operations consulting services to local businesses. She is also avolunteer mentor for Accelerate Kitsap, a nonprofit business mentoring organization thathelps local business owners grow their companies. Accelerate Kitsap mentors areexperienced business and professional people who volunteer their time to helpentrepreneurs solve problems and find ways to take advantage of new opportunities.You can learn more at AccelerateKitsap.org.

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