Entrepreneurs can often see business opportunities that could ensure the growth and sustainability of their business. Which are worth grabbing? How to do it? Chantal Durocher, Business Development Director for Desjardins Business, presents the key factors to navigate.
There are several ways to prepare your growth strategy
The benefits of growth can extend well beyond finance. All dimensions of business — including human capital, real estate, and other assets — are set to grow and become more complex. To meet an increase in demand or simply to strengthen your position vis-à-vis the competition, planning and managing growth is a fundamental step in the development of a company.
- Know your business
Before aiming for growth, you need certain stability. This implies in particular a reliable supply, enough staff, efficient production and delivery of its products and services on time. Adjusting unfavorable elements prevents growth from aggravating them. If necessary, we can subcontract, invest in equipment or add shifts.
We then assess the growth potential based on the resources in place. To sell more products or services, more raw materials and time are needed; can we get enough, on time and without compromising on quality? More people and stock require more space; can we optimize the current offices or would a move be expected?
- Monitor the market and its prospects
What place does the company occupy in the market? What about its competitors? These observations can help identify opportunities for growth. For example three specialized manufacturers win their tenders equally. If two of them merge, they find themselves in a dominant position vis-à-vis the third.
Much can be learned from industry leaders, but great innovations can sometimes be hidden elsewhere. We can take inspiration from a completely different field to automate a process that no one has thought of.
If there is one element that distinguishes entrepreneurs experiencing success in their growth from others, it is to remain on the lookout for economic prospects and social movements. Following the news and anticipating trends helps you make informed decisions to plan the growth of your business.
- Secure funding
Rapid growth can put a lot of pressure on cash: suppliers to pay, new hires, additional investments, delay before receiving payment… It’s not when you run out of money during the contract that you have to discuss of its growth projects with its financial institution, but rather upstream, when considering submitting a bid! Having credit agreements already in place allows the business to react with confidence when the right opportunity arises.
- Analyze opportunities and their impact
Many strategies can lead to growth: acquiring a competitor or a partner, developing new products or services, expanding into foreign markets… On the other hand, no company has unlimited funds; we must therefore set priorities according to our resources and our financial partners.
Through due diligence, we analyze each opportunity and its possible consequences from different angles:
Is this a perennial opportunity or more of a quick cash grab?
Does it increase our market share?
Does it make economies of scale possible?
Do we have the human and financial resources, the supplies and the equipment necessary to respect this commitment? If not, what is the game plan to get them?
When will we achieve profitability? Do we have the required financial capacity or do we need an investor to support us?
What are the risks?
- Seize strategic opportunities
Strategic opportunities are those that will often strengthen the company’s position and align with its objectives. These are the priorities! For example, with the acquisition of a supplier, a company could reduce its dependence on supply, better control its production, increase its profitability and acquire a competitive advantage. Conversely, non-strategic opportunities can often present pitfalls:
Employees could poorly explain the company’s choices and no longer recognize the vision to which they adhered.
Acquiring a company whose products have been subject to a recall or which has a negative connotation can tarnish the company’s reputation.
The resources invested in a non-strategic opportunity are no longer available to seize others that better align with the objectives.
Know more about the guide that you need how can you create plan for your business