Your quarterly earnings look good, all your bills are paid, and client turnover is stable. Your business looks good. Nevertheless, you have the feeling that you might be forgetting something…
This instinct is healthy. Business is inherently dynamic, and it’s not a good idea to assume that things are going to stay the way they are, just because they appear sustainable right now. Allowing yourself to become complacent can not only impair your business’ growth, it can also leave you vulnerable to serious setbacks in the future. When things are going well, and you get a chance to breathe, it’s important to use the opportunity to challenge your business to help strengthen it for the future.
Of course, it’s also important to be strategic about where you focus your efforts. Simply always driving sales and growth no matter what, isn’t the answer. Instead, you’ll need to critically examine your organisation, and develop strategies to facilitate healthy development and growth.
Find your weak points
Smaller businesses spend much of their time, especially while they’re still in their startup phase, focusing on staying in budget and finding the leads they need to survive. This can force your business to develop (or not develop) in ways that you never intended, and that could leave you vulnerable in the future. To find those weak points, you’ll need to examine your business and ask yourself what you are currently relying on, and whether you’d be able to cope with the loss of those critical factors. Some likely weak points might be…
Lack of skill redundancy
Many SMEs have a few irreplaceable workers. They know exactly what they’re doing, and seem to magically make problems disappear. Having highly specialised workers can be a good thing, but it’s not safe to rely on any single person too heavily, especially if no one else really understands how their job works. If this person decides to move on, you might not be able to adequately train a replacement in the time you have, or you might not have the expertise to train that replacement at all.
Do you have a tool that you rely on to operate your business? What happens if it breaks? In many industries, critical equipment is going to be far too expensive to replace out of pocket, and you’ll need to ensure that you have the financial resources needed to cover repairs or replacements.
Special reliance on one client
Startups often grow explosively in stages, but those bursts can be a double edged sword. If you land a huge new client that forces you to hire more employees, purchase more equipment, and rent additional space, you are going to be reliant on that client in the future. You’ll most likely need to take out a business loan to accommodate the sudden growth, and you’ll need that client’s revenue to service the debt.
Focus on Developing Resilience
Once you’ve identified where your vulnerabilities are, it’s time to start consolidating and making changes that’ll make your business more durable and more tolerant to future risk. As a result, you’ll be able to tackle bigger challenges and grow more aggressively in the future.
Get financial protection
Preventing cash flow problems is a familiar and ever-present issue. Fortunately you’ll be able to do something about it preemptively if you’ve done a good job at identifying weak spots in your business. Insurance can protect equipment, and lines of credit, standby loans, and other financing tools can help you cover other unexpected costs to minimise interruptions.
Develop your workforce
Employees that understand their jobs are good, but employees that understand their co-workers’ jobs are better. Ensuring that employees are somewhat cross-trained and familiar with how their own work fits into the grand scheme of things ensures a more competent and integrated work environment. As a result, it’ll be easier to deal with the loss of an employee and to up-train a new worker without throwing an entire department into chaos.
Avoid relying on individual clients, suppliers, or merchants too much. Whenever possible, seek out a broad range of people and businesses to work with. While it’s simpler to work with fewer businesses and customers, diversification protects you from becoming dependent on someone else’s success.
When to grow
The act of addressing these vulnerabilities to build a more resilient organisation can often drive growth all on its own. For example, diversifying your client base by definition entails going out and acquiring new customers. However, at that stage, you aren’t ready to sustainably pursue growth for its own sake.
You’re really ready to grow after you’ve successfully consolidated your business. By ensuring that your core business is resilient, you’ve built a solid platform from which to drive expansion. You’ll be able to take bigger risks and grow faster knowing that your business is built on a solid foundation. Check out our other post about promoting growth in your business for more information!