Successful Planning for Business Growth
I was privileged recently to help a fabulous small business owner in my role as business advisor.
This switched-on business owner had already grown his business to employ 24 full-time staff and doubled, yes, doubled his turnover during 2010 and now wanted to grow further. His business objective was to take on as many staff as practical, whilst maintaining profitability. What impressed me even more was his policy on staff training. He made it a high priority, even though in his line of business training would normally come last because of the low skill level required. What’s more, the business growth has been financed out of cash flow – how good was that?
Now we already had one of the three key factors for success in place: accountability. Taking on a business mentor is one of the best ways to ensure that your keep on track of your business plan. So we just needed two more success factors: a defined goal and some practical and effective business planning.
Setting the goal was easy – we agreed to 100 staff within 5 years. Now growth of that magnitude and rapidity requires detailed planning as all the different parts of the business have to dovetail together (working capital, HR, marketing, operations, new premises, more plant and equipment etc) so the next task was to complete a detailed set of financial projections covering the next 5 years.
To complete the financial projections, we needed to firstly work out the average turnover that one employee could generate. That way, we would know what turnover we required for 100 employees. Having done that, we then needed to work out the annual growth in turnover required (having regard to current turnover) which turned out to be 32% – a piece of cake when you’ve doubled yours in one year!
From there, it all fell into place into place: required monthly sales, cost of sales, overheads with the new premises, wage costs with the gradually increasing number of employees and how and when to recruit them, what supervision they would need, cash flow requirements, new vehicles and plant needs and the required marketing activities.
If you want to grow your business by enlisting the help of an experienced Business Mentor with key finance and marketing skills contact Nick on 0800 ASK NICK or email firstname.lastname@example.org.