Starting a business can be a real challenge but often the owners find that they are able to develop to a certain level and then suddenly hit a roadblock.
The first of these is usually at the point where they need to start thinking about taking on employees and developing up to and above 100k revenue.
If this sounds like your business then you’re not alone. In fact, so many companies experience this that there is even an academic model that describes the issues involved!
So what practical steps can you take to move your business up to the next level? Read on and find out.
One of the things that stumps many business owners is that when they have enough work they don’t have time for Business Development, and when they do have the time it is too late.
This is a very common situation and is the cause of a kind of ‘famine and feast’ situation where one month the company is flush with cash and then next it has an overdraft.
If you really want to take your business to the next level then you need to invest in business development to the extent that it happens all the time, providing you with a regular supply of new customers, even when you are flat out.
The first thing is to set aside a small amount of time each day to work on your business development. It doesn’t need to be a lot of hours, in fact, you are better off doing little and often so that it becomes a habit.
It’s often worth investing in a marketing professional to help you define your offer and refine your messaging so that your customers have a clear understanding of what you do.
You also need to understand your customer’s needs, where they hang out and what their pain points are. Doing this will give you valuable insight that will help you choose the right channels and craft your message.
Once the enquiries start rolling in you may need to look at automating some of your processes by using apps like Calendly and Zapier so that time-consuming initial leads are handled automatically.
In the early days of a business it is difficult to afford lots of people to do all of the jobs that need to be done, so if you want to grow your business then it makes sense to lean on automation.
Using things like integrated calendars makes appointment making so much easier and apps like Zoom or Microsoft Teams helps you to run meetings in a more efficient manner.
Think about using a CRM system like Hubspot to manage your contacts or MailChimp to send out newsletters and use Zapier to automate workflows so that tasks run efficiently and require as little input from you as possible.
Similarly any payments automation you can introduce will save you and your staff time, taking away the strain of manual reconciliation and giving you visibility of your payments, cashflow and cash position.
Every business has a set of non-core tasks that are often left to the owner but what you have to accept is that you can’t do everything and often it doesn’t make financial sense.
For example, let’s imagine that you are able to sell your services for £50 per hour but that you spend 4 hours a week doing your bookkeeping.
That’s a £200 ‘opportunity cost’, meaning that doing a non-core task yourself is effectively costing you £200.
It’s possible that you could find a professional bookkeeper, completing the same work in half the time.
By replicating the same approach to all of your non-core tasks you free up extra capacity that allows you to build your revenue.
One of the biggest problems for smaller businesses is that they have ‘lumpy’ revenue.
This might be caused by the Business Development issue we raised earlier or simply due to the ebb and flow of business, but either way, having an uncertain revenue and cash stream means that it is difficult to get any kind of momentum going.
Think about changing your business model to a subscription basis, where customers pay you a set amount each and every month for a set product or service.
The benefit is that you are less likely to suffer from the vagaries of the economy and will have a nice steady income stream.
Setting up a Direct Debit payment processing system will help give your customers confidence in your business and provides them with the convenience of an easy way to pay.
There will come a time when you simply can’t do everything yourself and you need to bring in new people.
You may choose to employ someone with relevant industry experience and whilst they may cost more, they will take less training and they may well bring in tips and tricks that can help your business develop.
But don’t think you always need to go for someone full-time or permanent. These days people value flexible working much more and so it is easier to find people that only want to work part-time or would help with a project just for a few weeks.
It’s also worth looking at bringing in younger people, especially when there are incentives like apprenticeship schemes to make it more financially viable.
Remember though that what you are looking for here is attitude rather than skills because it is unlikely that younger people will have developed the kind of experience that older hands will have.
The good thing about developing people in this way is that they can end up being the mainstay of a business that grows for years to come.
So when revenue is increasing every month, it’s great - but if you never collect the money then your business is heading for trouble, so make sure you keep an eye on your trade debtors.
Having a clear and defined credit control process helps when you are chasing customers that haven’t paid although you won’t need this if everyone pays by Direct Debit.
This is the perfect example of a non-core activity that can be better outsourced as you hand over the work to specialists whilst giving you peace of mind that your payments and cashflow is accurate and reliable. You’ll also avoid endless chasing and the time involved to get paid.
Lack of profit doesn’t kill businesses, lack of cash does so make sure you have an up to date cash flow forecast at all times.
Use it as a working document to understand clearly where you are and where you are going.
Speak with your outsourced bookkeeper or accountant and they will talk you through it and make sure you have regular catchups with them to go through cash flow and spot any issues.
Learn more about forecasting in a time of uncertainty on our blog.
If growing a business was simple then everyone would be doing it.
But by using our growth tips you can give yourself the best chance of getting to 100k and beyond and building a sustainable and secure business for the future.