In today’s environment many businesses are experiencing high levels of growth. This may be a result of organic growth, acquisition, or a combination of the two.
Over the past two years, COVID-19 forced many businesses to focus more acutely on managing their costs, reevaluating the products and services offered to customers, and adjusting their business models in order to ensure a more successful future. Moreover, companies that were eligible for government relief through a Paycheck Protection Program (PPP) loan, Employee Retention Credit (ERC), or both, were able to utilize these monies to support their business by maintaining their employees and right-sizing their balance sheet. This resulted in improved financial conditions, allowing for growth or acquisition opportunities.
Whether your strategy involves organic growth or growth by acquisition, your company must implement strategies to accomplish the following:
- Meet customer demand. The ability to meet customer demand is paramount to being able to sustain valuable relationships and continued growth. If a company falters on its delivery or quality of its products or services, it is likely to harm the business from a reputational perspective, leading to future reduction in revenue and limited growth potential. A commitment to quality and continued development of customer relationships is a key aspect to the sustainability of growth.
- Hire the right team. As a company grows and expands, its level of complexity usually grows with it. Acquiring a business adds a layer of complexity in terms of integration of people, systems, and customers; production requiring additional planning; and execution upon the completion of the transaction. It is important for owners and key stakeholders to keep this in mind and develop a plan that will ensure the company can adequately staff its growth. Complicating matters is the constant need to fill open positions and seek out the right candidates.
It is important to evaluate your management team and their skill sets to ensure that they align with the company’s growth strategy. It is not unusual for a business to outgrow the abilities of certain team members, resulting in the need to upgrade the talent level.
- Ensure access to necessary financial resources. Another crucial factor to consider is how the business will finance its growth. It is important for rapidly growing businesses to have good relationships with their lenders, as this may be a necessary resource for funding. Having appropriate lines of credit to meet growth demands will provide a company the ability to meet those needs.
Owners should have regular conversations with their banker(s) to discuss their business needs and be able to increase debt availability when needed. If the business is planning to expand through acquisition, it will be important to present the financial institution with accurate financial statements and a clear business plan.
There are certainly other factors that impact strategy for growth-oriented businesses, such as supply chain constraints and technology. Companies need to develop a solid plan that can be adjusted as needed based on the demands of the business. It is exciting to be part of a growing business, and the execution of your business plan plays an important part in your future success.
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