Many small businesses experience continuous growth, but sometimes that growth levels off and sales become stagnant. When this happens, there are five key areas you should examine to identify what’s going on.
1. A Lack of Information
Problem: If you don’t understand exactly what your customers want and work to fulfill those needs, your business growth can stall. Do you know what’s working in your business and what isn’t? When is the last time you had a conversation with your customers to find out what you’re doing right and what needs they are having met by your competitors?
Solution: First, you should form two focus groups. One should be made up of current customers who do steady business with you, and the other should include people who do not currently buy from you. Ask questions to determine why those who buy from you do, and why the other group does not. Next, use the information you glean from the focus groups to create a survey for all of your current and past customers. Ask them specific questions about what you’re doing right, what you could improve on, and how. Once you have this important information, tweak your business model to reflect what your customers want.
2. A Lack of Management Skills
Problem: Some small-business owners never let go of the startup mindset that they have to do everything, and they never delegate work to others or hire additional help. But as a business grows, it will require different skill sets that you as the owner may not have. For instance, hiring your first employee is one thing, but as your business grows and you hire more staff, it will require management that can aptly lead that staff to success. The same is true for other areas, such as finance, marketing, purchasing and managing inventory, website creation and maintenance, and fraud prevention. If your business has stalled, take a look at your business operations. Would outsourcing tasks or bringing on workers with specific expertise help breathe new life into your business and get it moving again?
3. A Lack of Capital
Problem: It takes cash to grow a business, and if your profits aren’t sufficient to fund that growth, you won’t be able to take advantage of opportunities as they arise. This can negatively impact your business in many ways, such as the inability to hire new staff to support growth, being unable to launch a new product that is in demand in your industry, or not having the capital to open a second location in an area that is showing potential for growth.
Solution: First, you’ll need to understand how much capital you need to support growth. Forecast your income, expenses, and cash flow needs by creating realistic financial projections. Then decide the best way to find the funds, whether that’s from your private accounts, friends and family, a bank loan or line of credit, invoice factoring, or an alternative lender.
4. A Lack of Planning
Problem: If you don’t have a clear picture of where you want to go with your business, you’ll have a difficult time getting there. A true understanding of where your business falls in the marketplace is crucial to growth because without it, you can’t set realistic short-term, mid-term, and long-term goals.
Solution: To get a true picture of where your business is, develop a SWOT analysis (strengths, weaknesses, opportunities, and threats). Once you have an accurate picture of where you are, you can begin to develop a plan that will put your business back on a growth path.
5. A Lack of Training
Problem: Your employees are an important part of your business, but if they aren’t properly trained, they could be holding you back. For example, they might not be giving your customers the level of service they want, or your salespeople may not be equipped to bring in the amount of business you expect. As the owner, it’s up to you to provide them with the tools and training they need to be the best at their jobs.
Solution: After having honest discussions with your staff about what they need to better do their jobs, design and implement an employee training program that strengthens each employee’s work performance.