It can be difficult for sole traders to make sure their business is ready for growth. To help keep you on track, NatWest has put together a five-step guide to smoothing out growing pains before they have a chance to develop.
If all goes well, your business might start taking off to the extent that you worry about coping with the increase in demand. While you’ll want to be aiming for growth, it can be difficult to prepare for as a sole trader meaning many are left in the lurch when their business develops.
There are some steps that can help to ease any growing pains you may experience though and we’ve compiled five tips here to make sure you’re clued up on tackling the prospect of growth as a one-man band.
(1) Plan for growth
As a sole trader, the likelihood is you’re going to be limited in options for managing growth the two routes you can take relate to price and volume. If it’s the latter you favour, you’ll need to ascertain whether you can provide more of the same product or service at a cheaper price, possibly through a contractor. If that’s the option you plump for, do be aware of the risks here in terms of quality dilution though, as it can be a case of one step forward two steps back.
While discounting can be a helpful element to your pricing strategy, it needs to be regarded within the bigger scheme of things and used to obtain other benefits like larger committed orders. Too often margins are squeezed and profits are lost when discounting takes over in an effort to secure business.
If you decide on price, you need to consider the value of what you’re offering and what you could possibly do to position it at a higher value.
(2) Keep plotting business plans
You’ll likely know the value of setting out plans and forecasts in the early stages they’re crucial to staying on top of cash flow, as well as knowing your firm’s current trajectory. However, some business owners push it to one side when the initial period has been weathered. This is a real mistake, as if a focus on plans and growth strategies continues it will help distinguish you from others and enable you to plot out a future forecast providing clear aims with clear timescales.
(3) Don’t be afraid to ask for help
Too many sole traders try to balance everything themselves. Understandably, the business is your project and you may feel you know it best. Yet you shouldn’t overlook the extensive resources out there check out the Federation of Small Businesses or the Association of Independent Professionals and the Self Employed as useful starting points. A business banking advisor is another option, though you may need to research carefully if you’re after someone with specialist knowledge of your sector.
Marcelino Castrillo is MD of business banking at RBS in September 2015.
Prior to to that, Castrillo was MD of SME banking at Santander, where he was responsible for leading the challenge of scaling Santander's business bank and managed the business through a period of significant change.
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