19 December 2019
Most business owners have one thing in common: regardless of what industry they operate in; whether its retail, construction, manufacture or hospitality, they are driven by the desire to see their business grow. However, this path can have many hurdles along the way. Graham Hall, Investment Manager in Maven’s Nottingham office, explores four common barriers a business must overcome if it is to fulfil its true potential.
1. Your employees (or lack of)
As a business founder, you may find yourself spending too much time working ‘in’ rather than ‘on’ your business. Often senior decision-makers are wasting valuable time working on duties such as paying bills, collecting customer information and inputting data into online systems. This is often because they fear delegation and the risk of others not completing the task as well as themselves.
Prioritising is crucial. Completing administrative tasks is important to keep a business organised and functioning efficiently, but it shouldn’t be to the detriment of strategic planning. To grow your business, you will need to surround yourself with great employees, who possess a strong and varied blend of expertise and experience, and who will be able to shoulder some of that burden.
Don’t leave it until the point of expansion before you start looking to recruit, always be on the lookout for talent. Good hires can significantly ramp up your output, helping you to grow your business faster, whilst simultaneously giving you time to work on strategy and other high-level business functions.
2. Poor planning
To maximise your growth potential, you need a well-defined strategic plan in place. This should include clear objectives on how you plan to grow the business to drive the bottom line, but equally how you will manage cash flow. Cash, not profits, is the lifeblood of any business and enables it to operate.
When there is no clear plan, your staff may also become demotivated, disengaged and unproductive. A good leader will pull together a strategic plan which will be communicated clearly across the business and subject to regular review with ‘touches on the tiller’ to keep them in line with market and ensure goals are delivered.
3. Resistance to change
Many businesses miss growth opportunities, or even regress, due to a reluctance to change direction or move with the times. History is littered with examples of companies such as Nokia and Blockbuster Video who failed to innovate. An unwillingness to adapt to changing consumer trends or to diversify into complementary growing markets could see your business left behind.
A lack of appetite to risk can also prove to be a barrier to growth. A measured approach to risk taking is inherent to building a successful business. Governance, processes and controls can be used to manage risk whilst not curtailing innovation or preventing you from capitalising on market opportunities.
4. Poor finances
Sufficient working capital is a key aspect to any company’s financial health and not having control over this critical financial metric can have a serious impact on the future of your business. Generally, without positive working capital you cannot pay your employees, suppliers, lenders or make the investments required to grow your business.
To ensure smaller businesses have the tools to grow, external finance is often required. A loan can cover short-term funding requirements while giving the business the money it needs to grow or can bridge the gap between customer orders and supplier payments to help the company meet its funding obligations. Inconsistent cash flows, seasonal sale fluctuations, new business opportunities, growth spurts, or generally just to have some wiggle room for unanticipated events can all be valid reasons to get a loan.
It’s possible to maintain a consistent cash flow just by making smart adjustments to your business model, whilst continually monitoring your assets and liabilities, but there are occasions when external assistance is required to keep your business agile.
Are you looking for funding for your business?
If your business is in need of finance to help unlock its growth potential, Maven may be able to help. Maven is the fund manager for the Midlands Engine Investment Fund (MEIF) and can lend businesses debt loans between £100,000 – £1.5m to support a range of funding requirements. Get in touch with a member of the team today.