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Going for Growth
Richard Branson suggests that entrepreneurship is about providing products or services that help to fill gaps in the market. Goods and services provided by an entrepreneur should help to make people’s lives better. While it helps a lot to dream big, it is important that business owners start small, driving at their goals with a measured balance of cautious optimism.
The dynamics between founders, unsurprisingly, has a significant effect on the ability of a business to scale up. A good business partner helps to reduce the burden of managing the business and its finances. This has a significant effect on the ability of a business to raise money. Statistics show that small businesses with two founders raise 30% more money on average.
With more funding, a business can increase its chances of surviving past five years. Only 50% of small businesses survive for at least five years. There are several reasons for the high failure rate of businesses. Some of the main reasons include unproven concepts, unreliable infrastructure, poor cash flow, and inability to scale.
Executing Market Research
A business needs to ensure that it has the right infrastructure in place that supports a proven concept. With appropriate infrastructure in place, a business is better prepared to scale when consumers indicate more demand for its goods or services.
Data analytics is more important than ever. Mines of digital gold (data) provide invaluable insights into future events, revenues, costs, and timeframes that small businesses can use to position themselves for optimized growth in increasingly hypercompetitive markets. Small businesses can use desktop research to find key information that may unlock value in their strategic plans.
With enough data and the correct implementation of data analysis, a business can have a better understanding not only of future events but also of its current progress in its markets of operation. In many cases, businesses may find that they have surpassed their goals by a significant margin. In such cases, they may be in a better position to scale-up their operations.
Effective Strategic Plans
In order to achieve strong cash flows, a business needs to create a robust plan that provides a clear view of future revenue. It is important to have reliable quantitative analysis to guide the planning process. In order to carry out high-quality quantitative analysis, business owners must exhibit a strong understanding of their business model and performance record.
While it can be tempting to make attempts to scale as quickly as possible, businesses would be wise to exercise patience and stick to the foundational principles which can keep them alive. It is tempting to go all in but it is also dangerous in many cases. Businesses are encouraged to stay lean for as long as possible. Expenditure on staff should be based on business needs rather than expectations of future profits or funding. Some businesses find that they can minimize risks of scaling up by carrying out controlled tests of their scale-up hypothesis. By carrying out such tests, they can improve their grasp of reality while also reducing the costs of failed expansion.
