Achieving high sales targets and meeting demand is great for your business. Setting unrealistic targets, however, can take a toll on your business financially and also on your health and spirit.
Executive coach Refilwe Khumalo says it’s important to plan ahead to forecast how much business you can realistically take on financially and physically, to ensure that you achieve work life balance as an entrepreneur.
“Maintaining a balance between demand and production also helps you to manage your supplier and customer relationships effectively. If you constantly have too high of a demand it leads to pressure on your suppliers resulting in dysfunctional supplier relationships which spiral into dysfunctional customer relationships,” she says.
How to determine how much work you can cope with
Rapid growth has its risks, but the right strategy can deliver stability, security and long-term profits. Khumalo recommends the following tips for planning ahead:
Assess your current business performance
Before pursuing a growth strategy, it’s essential to make sure that your business is running efficiently. What is the current financial standing of your business? Do you have sufficient cash flow?
If your business is in the red, taking on more business and exhausting your staff, resources and cash flow could make your problems worse.
Assess if your business can cope with expansion
It’s important not to neglect your existing customer base, as doing this will affect your growth and profits. Do you have the resources and systems in place to carry on your existing business while targeting expansion elsewhere?
Will new growth initiatives disrupt existing performance? How will you ensure your customers don’t lose out while you are trying to gain?
Assess how growing will impact your financials
Take into account additional staffing, refining production processes, additional equipment, outsourcing certain services, pricing, marketing, distribution and service levels. Could these changes upset current customers? Will your employees remain motivated?
How to get your business to the desired successful stage:
Understand your market
Thoroughly understanding your market will help you to develop a growth strategy that puts you in a stronger position to win and maintain a bigger market share within your industry.
Understand your competition
Developing a competitive advantage strategy that will see you reach your desired market position requires you to study who your existing customers are and ascertaining if there are any other groups that may require your product or service and that you haven’t targeted before.
Determine if your product or service can be used for purposes that you had not previously considered which would make it appeal to a wider market. Start by studying your competitor strengths and comparing them against your own.
Diversifying your product or service will help to grow your business. Consider the following strategies for growth: new product or service offerings, new offering-related products or services to existing customers, new markets for existing products or new products for new markets.
You can also expand your business by joining forces with another business. Partnerships or joint ventures offer both partners significant benefits, which include sharing experience, skills, people, equipment, more resources, a bigger pool of contacts, reduced commercial risk and additional customer bases.