Growth is good. If a business isn’t growing, it’s dying. And many SME owners are in it for the long run – they’re not looking to sell their business as soon as it becomes profitable. Long-term success depends on finding a company’s sustainable growth rate, or SGR. But how can a business achieve sustainable growth?
The Goldilocks growth rate
A business must not grow too quickly, otherwise it will run out of money. But it must also avoid growing too slowly, stalling innovation. If you’re not moving forward, you’re moving backward! Optimising your growth rate is the aim of the game.
A sustainable growth rate, or SGR, is the fastest a business can grow without having to find money outside of its revenue stream in order to do so. In other words, how fast can the business grow without borrowing from the bank? If you’re in it for the long run and want your business to achieve sustainable growth here are some things to consider.
People buy people
Robots may be on their way to take our jobs, but for the time being, people are your most important asset when it comes to the sustainable growth of your business. Sometimes it’s necessary to take a dispassionate look at the people who make up your business and reappraise their performance. Reboot your talent if necessary. After all, a happy worker is a good worker – nothing beats an employee who is engaged and motivated to make your business succeed.
Provide a good work-life balance for your employees and achieving sustainable growth for your business will be a whole lot easier. Use metrics such as questionnaires to measure job satisfaction amongst employees and make changes where necessary. Good workers are hard to replace, so it makes good financial sense to keep hold of them.
Mind the fundamentals
Keeping your business efficient is essential to maintaining sustainable growth. Ensuring supply chains are in check with customer demand and keeping a tight focus on accounting and cash-flow all guarantee the smooth day-to-day running of any business. Keeping on top of these fundamentals will mean your business is still operating in the long-term.
Keep them coming back for more
Sales are an obvious key to generating profit. But relying on one-off or occasional jobs to pay the bills is hardly a reliable road map for sustainable growth. What’s important is developing long-term relationships with customers. How does a company do that? Practical methods include things such as memberships but customers form long-lasting bonds with companies through branding.
What sets your business apart? Finding your niche is fundamental to sustainable growth. Put your particularly unique service or product front and centre, invest in decent marketing and stand out from the crowd. In a crowded market it’s imperative to zig where others zag while cultivating genuine relationships with your customers. This may seem wishy-washy but creating a persona out of your business will help maintain a sustainable growth rate as one-off customers will become recurring customers.
Bend, don’t break
We all know the world is constantly in flux. Disruption from new kids on the block, the introduction of once-futuristic technologies and the changing mores of customers are all challenges to businesses. But they are also opportunities. In order to maintain sustainable growth, a company must be flexible and move with the times.
Being proactive rather than reactive, investing in brand development, emphasising consistency in an ever-changing world and staying one step ahead with thorough and targeted market research will all ensure the sustainable growth of your business.
For more advice in the small business world, check out the Accountants East London blog.
