No matter what industry you’re in or how big your operations are, guaranteeing sustainable business growth relies on a few key management practices, writes Ann King.
Sustainable business growth is all about thriving in the face of economic or environmental turbulence.
And that means making sure your business is in a healthy and profitable state now and in the future.
By setting a great foundation of sound management practices, you can position your business to scale, as well as weather any changes in conditions, and support you financially into the future.
Getting this right will also help keep you inspired to achieve more with your business – and that in itself is an important element for longevity.
But how can you tell if your business growth is sustainable? What can you do to best position your business for the future?
Well, here are four essential practices that will turn any business from fumbling to fantastic.
1. Maintain good books
To achieve real, sustainable business growth, you need to measure and analyse your profits, your budgets, your cash flow and your costs.
In other words, you need to know your numbers.
Many people make the mistake of just monitoring sales and assume that good sales equates to growth. But this isn’t the case.
You need to understand your costs, monitor your outgoings and have strong bookkeeping foundations, so you know exactly where you are at a glance.
Understanding your books doesn’t just mean focusing on your Profit & Loss statement either. For example, you might be making good profits, but if cash flow is terrible, your business may fail the moment you hit a bump in the road.
By keeping your books up to date and by tracking the overall picture, you know when things need to be adjusted, such as increasing pricing to cover increased costs or changing suppliers.
Knowing your numbers means you can react to negative situations promptly, which helps save cash flow and keeps your business agile.
Being aware of potential issues means you can make timely, informed business decisions, and this paves the way for sustainable growth.
2. Set measurable, realistic goals
Sustainable growth isn’t just a single number that indicates success.
To achieve growth, you first need to set measurable goals – not just budgets, but business goals as well.
Setting arbitrary goals like, ‘I want to earn more money’, won’t work. You need to be able to measure and be held accountable for achieving the goals.
A more specific goal that you can measure would be: ‘I want to improve my administration efficiency so I can take on two new clients’. By achieving this goal you are not only increasing your business earnings, but you are reducing costs by becoming more efficient.
You’re also held accountable to your goal by setting an achievable target, which keeps you motivated and moving forward.
Setting measurable goals makes your business stronger because you’re finding problems and solving them.
It’s also important to understand your own skillset and work with your team to cover gaps in your business skillset.
By setting goals that you can measure, you’re turning your business into a resilient, well-oiled machine.
3. Diversify so growth doesn’t rely on one factor
A key indicator that your business is on track to achieve sustainable growth is that you have adequate diversification of your products or services in place.
Just as you can’t keep your prices stagnant over time, you also can’t keep your service, or product offering to one stream.
Diversification means you have a more comprehensive range of profit sources, so you aren’t relying on one income source.
In bookkeeping, for instance, you can’t offer just one service, such a payroll, and focus solely on that offering. All it takes is one new software development to take off, and suddenly that one service you were providing is obsolete.
You could be a bookkeeper that focuses on payroll, but you should also look at providing another compatible service, so you can maintain a diversified service offering, which helps make your business indispensable to your clients.
The same principle holds true across all business types; from cafes that roast, grind and sell their own coffee beans, to publishing businesses that offer bespoke design services.
4. Focus on customer/client success
This brings us to a critical element in successful sustainable growth: maintaining your clients or customers.
By making sure you satisfy your customers’ needs and understand how they perceive your business, you can improve your services.
If you keep your customers happy, they turn into repeat customers, which is a critical component of success.
Loyal, satisfied customers will not only happily pay for your products or services, but they’re also your most efficient marketing channel.
Once you have a happy clientele, they won’t hesitate to refer their (like-minded) friends to your services, which means more quality customers for you and a chance to expand your services with each new client.
Surrounding yourself with positive interactions – like having long-term clients, achieving your goals and being in control of your finances – also helps you enjoy your work, which really should be point number five.
You need to enjoy what you do and be true to yourself. It’s this drive that is the most important factor contributing to long-term, sustainable business growth.
This feature was originally published on MYOB here