Managing growth to keep business on track
There are steps you can take well in advance to ensure you keep a hold of the reins
If you’re a small-business owner coming out of a growth phase, you’re not alone. In 2015, 86 per cent of small businesses in Ontario reported growth, according to the 2016 Small Business Banking in Ontario survey by Meridian Credit Union.
However, the survey indicated this number dropped by 11 per cent in 2016 because of concerns over cash flow, economic uncertainty and an unstable real estate market.
Here’s a look at how companies can protect themselves during a growth phase, thrive during a downturn, and be proactive instead of reactive:
Communicate change effectively to your team Every company needs a communications strategy. “Change is an inherent part of the day for owners and managers,” says Ruth van Vierzen, founder of the recently launched business development company REV2 Business Growth Agency in Peterborough, Ont. However, if you’re not at a managerial level, change isn’t part of your day-to-day activities and it can make people nervous. If employees don’t understand why change is happening they can assume the worst, and that fear can have a negative impact on your company. “I’m a big believer in staff meetings,” van Vierzen says. Do a weekly recap with your team and celebrate growth victories regularly, she recommends. If your office is remote, conduct regular webinars and use Skype to keep staff informed.
Maintain high-quality talent Set out a future-focused human resources plan to determine who you need, and what skills are required, to do what job. This is valuable for succession planning and when hiring to find the right fit for new roles at the best time, while accommodating the company’s growth.
Mind mapping — an exercise where you brainstorm ideas, make an action plan and present it to staff — can help you manage goals for the next five years and ensure that you have sufficient talent to fill key roles. The mind-mapping process streamlines work processes, saves time, reduces information overload and boosts overall productivity.
“I’m a big believer in outsourcing,” says van Vierzen. “It affords companies a way to support growth without over-hiring.” You can outsource specific jobs, and also things like payroll and job search. Hiring freelancers is also a great way to “test” out employees and make sure they’re the best fit for your company.
Maintaining talent can be especially tough for companies that are “self-branded” such as Your Power Yoga, a GTA-based mobile yoga service owned by Ashley Burton.
“I’ve created an eight-week mentorship program to ensure new instructors are consistent with my ‘formula’ of teaching,” says Burton.
Business has surged because of Burton’s personality, knowledge and her ability to connect with her clients. While she can pass some of that onto a small team (there are currently 10 instructors, and more in the training program), the challenge is being able to maintain a high quality of instructors as she makes plans to expand to other Ontario cities and eventually New York City (target date is next year).
“She’s the brand of the company and it’s hard to copy your own brand,” says van Vierzen, when asked about Burton’s struggle to maintain consistency of service and experience for her clients.
Van Vierzen adds that Burton would benefit from setting up biannual training conferences and creating a program to praise and give feedback to key instructors. She could also set up territorial directors in the major hubs to keep instructors motivated and potential hires up with training.
Maintain good customer service A decline in customer service as business booms, or becoming complacent during a growth phase, can be a deal breaker for companies.
“Companies need a team of customer service ambassadors who are proactive about growth and customer service,” van Vierzen advises. You need a plan in place to satisfy customer needs and be able to tweak that strategy as you move along and business grows.
Implement a quality-control standards policy and make sure that you don’t lose sight of your company’s vision, mission and principles.
If customer service starts to decline, it’s a sign that you’re growing too quickly and you may need to take a step back. Manage your budget In the early years, startups are typically tight on cash, without much wiggle room when it comes to spending. But as periods of austerity set in, it can be tempting to loosen the reins and overspend.
“Rely on the advice of your financial team,” says van Vierzen. Understand your finances and have regular meetings, keep up a conservative approach to spending and manage the cash you have on hand so it’s there when needed.
“Cut your expenses, tighten operations and don’t overspend your surplus unless it’s necessary,” says Geordan Robertson, director of small business for Meridian Credit Union. “Try and invest the surplus if you can.” You should also stress test your finances by finding out what your payments would be if interest rates went up, let’s say 2 per cent. Try to spend as if interest rates were slightly inflated. A borrowing strategy should also be established. As a general rule, loans are for big ticket items — property, rentals and big equipment — and lines of credit should be money you only use in a downturn.
“If you use up your line- of-credit when times are good on rent or other big ticket items you won’t have any money available when times get tough,” Robertson says.
Ask if your growth is sustainable Regularly question whether your company’s growth plan is sustainable in terms of both internal resources and external factors.
“Regular, honest sustainability assessments will help curb overspending during growth periods and make for better, more informed decisionmaking,” says van Vierzen. Keep the process simple and identify growth factors with your entire company, mapping out internal and external areas for expansion. Discuss your growth with everyone on your team and get their input. If you ask pointed questions about workload and customer service complaints to front-line staff, you’ll get insight into how sustainable your current growth path is. “My goal is to check in regularly (either by phone or in person) with both instructors, and clients, to make sure everyone is happy,” says Burton.