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Finance

The Problem of Small Business Growth

For any small business, everything needs to be orientated towards not remaining small for too long. Growth in business is not just a desirable result, it is necessary for survival. You might well think that it is okay to truck along at the same level indefinitely, recording the same sales and seeing the same monthly expenses and investments, but stagnation is nearly always the kiss of death for a small business. And there is a very good reason for this.

The reason why stagnation is ultimately bad for a business is that it doesn’t actually mean that the business will remain at the same level of profitability and expense. In fact, this is likely to decrease in time. The reason for this is that the appeal of existing inventory will continue to draw demand, but without any expansion to meet that new demand, you will eventually scare it off. In time, this could mean that the company fails.

So, how can you ensure that your business grows? Well, the first thing is to put a growth-positive strategy in place, something which effectively boils down to orientating operations towards making the kind of investments necessary for growth.

For example, an ecommerce company might decide to outsource fulfilment, allowing for a larger order load, and so operations could be orientated towards making that investment. There are many like examples of investments which promote growth, and one of the ways to ensure that a business grows is being able to make them.

Overcoming Challenges

Nevertheless, this is the proactive, positive side of growth. There is also a reactive negative side, which is responding to all the challenges associated with growth for a small business. There are countless different things that you could find is holding your business back and making it difficult for you to achieve growth.

These challenges nearly always revolve around not having the necessary funds to respond to problems, simply because the majority of your revenue is going on merely staying afloat. This is a dangerous situation, as it approximates to the deadly stagnation previously mentioned.

Cash Flow

Before getting on to a few of these business challenges and obstacles to growth though, it is wise to give a special place to cash flow, as it can often be the source of many of these problems, if not the actual problem itself.

A healthy cash flow means being able to meet all financial obligations as and when these arise. If you are ever waiting for money to come in before you can meet a financial obligation, then there is a cash flow issue. Furthermore, growth is impossible until this has been rectified.

This is why so many different businesses turn towards things like invoice and debt factoring, which is a means of seeing the money needed upfront before paying it back later. Factoring service Thales Financial say that it is precisely in order to see growth that companies invest in invoice factoring, but real growth cannot be seen until the cash flow issues have been resolved.

Further Business Challenges

But what other challenges lie in between a company and seeing the type of growth that is necessary for its survival? Recruiting new employees is certainly one of the major things that is often necessary. Sometimes, expanded operations simply need more people to run them. There is also the issue of attracting new customers, which presupposes inventory expansion in time – another thing which requires a new investment.

And that, really, is the unifying factor here. Businesses need to make ever greater investments in order to grow. The challenge is being able to make them.

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