Writing for Business Advice, Steve Noble, chief operating officer at Ultimate Finance, outlines three signs‘small business owners should look out forthat’suggest its time to expand and what they need to do to move to the next stage.
You never hear a small business owner saying they set up their own business in something they didnt believe in. The reason we have such a vibrant entrepreneurial spirit in the UK more than 650, 000 new businesseswere established in 2016, a new record according to the Centre for Entrepreneurs is because of people taking the plunge and having belief in their ideas.
It takes passion, drive and quite frankly, cash to build a business from an initial thought in the middle of the night, to a fully-fledged company with its own brand, products, staff and finances.
But of course it takes considerable time, effort and resource to build a business. Until the company has reached a point where they can afford to take on their first employee or rent out an office space, it can often be a “one man (or woman) band” with the owner doing everything from CEO to cleaner in the early days.
The tell-tale signs of growth
Of course, for some businesses, this model can be very successful; at Ultimate Finance we work with dozens of small or micro business owners who are keeping their customers happy, making good profits and whose owners are more than happy to be going it alone.
However, for many small business owners, growth is the logical next step but it’s one that can seem pretty intimidating.
The analogy of a business being like looking after a baby is one we often hear; you give it your full attention, attend to its every need and love it beyond anything.
But often, you’re so caught up in the daily routine that it’s hard to see the bigger picture; in a business sense this can mean that those indicators that maybe the time is right for expanding can be easily missed.
it’s widely used but I like the term tipping point? for those moments when a business is ready for the next stage in its development and the challenge for business owners is to identify what these points are and be ready to take full advantage of them when they occur.
Here are three common tipping points for small businesses.
Your balance sheet is healthy but you’re working flat out
This is very common. Your business is doing well; its finances feel in decent order, but what should be a happy time is fraught with stress because you’re not able to keep up with the demand for what you do, or have a spare moment to enjoy it.
Having some stress in your business life is to be expected, but alarm bells should be ringing if you feel your mental or physical wellbeing is at risk from the pressure you’re under.
We recently met with entrepreneur James Shillcock, the founder of Vivid Matcha, who knows this feeling only too well.
for the first couple of years when I was running the business I was doing a lot of it by myself, ” he said. “I was really stretched in terms of time, I wasnt giving myself enough rest and enough breaks, and it grinds you down.
Of course your business is a very important part of your life, but it’s crucial to keep eating well, exercising, resting and making time for other things you enjoy.
You sell or offer one product or service and your customers are asking you for others
You have built a great reputation for what you do and have a loyal and growing customer base. But they are starting to ask for different products, or services, and at the moment you don’t have the time or money to think about expanding your business into new areas.
Turning down business may seem like a nice problem to have, but it’s a worry if you unexpectedly lose a big client or your pipeline stalls because of seasonal demands.
This is the time to go back to your business plan and assess your growth plans and aspirations. No business should be standing still; if you don’t keep moving forward then another business will happily take your place.
You have twenty different job titles
you’re CEO and CFO. But you’re also receptionist, marketing director and the sole HR representative. This is admirable plate-spinning, but you can’t be all these things all of the time.
it’s important to recognise where your skills lie, but also where your limitations are. When your business starts to grow, it’s impossible to be a specialist at everything.
You need the headspace to step into the CEO role; after all, whilst there are dozens of books on how to lead and run a business it doesnt always go by the book (in fact it very often doesnt). Time is needed to allow this growth, and where, possible, you should look for options to either outsource or take on part-time employee(s).
Recognising the need for help
If one or more of these tipping points feels familiar, then it’s perhaps time that you thought seriously about expanding your business. This can be a little terrifying of course but there’s lots of excellent advice out there that can remove some of the fear from the process, particularly when it comes to financing expansion.
Proper handling of cash flow is a vital skill at any stage of your business? journey, and growth can come at a cost, but this should be seen as a necessary long-term investment for both your health and the business.
Steve Noble is chief operating officer at Ultimate FinanceA business banking revolution? The best challenger banks for startups