This blog has been provided by a guest writer, Murray Fulton. Murray is an Advantage Business Director, Partner and Business Advisor who is passionate about helping SME business owners achieve their goals, and has worked with SME clients since 2005. In this article he shares some of his experiences working with clients who wish to grow their business.
One of the most regular requests I have had, and continue to receive from my clients is the following question: “How do I fund the growth that I want in my business?” closely followed by “How do I take my team along with me so that we are all growing the business?”
Here are some key pointers that as a business owner you need to consider and execute to achieve a successful business growth target.
Set a realistic target
Make sure that your growth target is SMART:
Specific: What are the revenue, market share, customer engagement, gross margin, net profit, cashflow, and market position components of your goal?
Measurable: Have monthly actuals, along with month to date, and annualised actual results, and compare these against your forecast.
Achievable: Make sure that your growth goal is both challenging, but also not set too high. At the same time, don’t make your goal too easy to achieve.
Realistic: Make sure that the time forecasted to achieve your growth goal is realistic. No point in having a realistic 2 year goal, and trying to achieve it in one year.
A growth goal without a timeframe is simply a statement of intent, or at worst simply a hope.
When making your growth goal realistic, ensure is has a clear timeframe.
Take your team with you
You need to adopt a “Clarity, Visibility, Ongoing Conversation” Approach:
Clarity – make sure that your team is clear regarding:
The overall growth goal;
Their role in the overall growth role;
The roles of each person in the team, how each person will contribute to the growth goal;
How all the efforts of each team member come together to help you achieve the growth goal.
Make the growth progress visible:
In a way that is totally clear;
In a place that is seen every hour of every day;
To all teams, and every person in the business.
Minimise if not abolish formal meetings.
Have an ongoing conversation about the clear growth goal, using the information that is visible. This helps bring the team and all the people in the team together and moving forward together.
Have funding in place
More growth goals fail due to lack of funding, or insufficient funding than any other cause.
Start with your SMART target
Banks need a financial forecast, which forecasts per month the current year, and at least the following year.
The financial forecast needs to:
State the basis of the forecast -i.e. the assumptions
Include the last 2 years business performance at minimum (if the business has been trading that long), as this places the forecast in the context of what has already been achieved
Forecast the profit, the cash flow, the Balance Sheet, and the difference between the profit and the cashflow (this is called funds flow).
This forecast is known as an “integrated financial forecast” and without this, banks will not usually provide the level of funding needed.
Monitor your Progress
You need accurate monthly actual data.
You need to compare your actual results with your forecast and then:
Identify what you did well, and do more of that.
Identify what was done poorly, and do less of that.
Repeat this process monthly.
Create trends of your performance Vs your forecast.
Share this with your team, warts and all.
Ask them for their ideas to improve performance
Keeping Positive and Realistic
Growing a business is never easy, but it is more than possible.
Be kind to yourself as leader, as well as your team, but also set your performance expectations.
Ensure that your expectations for yourself and your team are met by:
A realistic SMART growth goal in the first place;
Share progress clearly, visibly, warts and all;
Engage your team while sharing progress;
Build your team’s buy in to the goal.
Reward yourself and your team together, using any of the following human “rituals”:
A simple food based gathering;
Celebrating team and business milestones – birthdays, growth goal achievements, major life events within your team that are positive and not sensitive to disclose; the birth of a child, an educational achievement etc.
Remember, no business or team can achieve goals exactly as planned. There will be setbacks and successes. Share all of these as a team, as achieving a goal is about recovering from setbacks, and celebrating success.