2020 was an immensely difficult year. Because of the economic downturn in the country, it left a lot of businesses with insurmountable odds to make things work and so, many businesses have had to shut up shop. While this has been unfortunate for many business owners, it does present those who have been able to continue their business successfully with new opportunities and new questions to ask themselves.
Not least of these is knowing whether your business is scalable (even after a torrid economic year). In fact, scalability is often made possible because of economic downturn. Despite the disaster of 2020, it does look as though the economy will grow by quite a margin in 2021 (as is normal after a recession). There is no doubt that business will pick up and that businesses that have fallen away as a result of the pandemic have opened up space in the market, leaving clients ready to be picked up.
Here are some things to think about as you consider growing your business in 2021:
1. You should only scale once you are ready.
Scaling a business is an endeavour that should never be taken lightly, but should come as a result of good deliberation and forethought. That is to say that scaling for scaling’s sake is a risk that endangers all stakeholders in the business. Make sure that it is something you want to do and are ready for before taking the plunge.
2. Having to reject business opportunities for lack of capacity is a good sign for scaling.
The more opportunities you have to turn down shows that there is room for expanding your business in some way or another. You will have to evaluate what kind of opportunities it is that you are turning down – even if these are outside of the regular scope of your business. Is it perhaps an opportunity to bring in someone with greater superiority and experience in a related business activity? Is it time to increase the workforce with just one or two people to fill the gap? Are the opportunities you are turning down due to seasonal demand?
Note that there are many reasons why you might need to turn down an opportunity, but getting down to the root of the cause is the only way to determine what your next step should be (dissecting your finances is one way to assess your situation before you decide to proceed or not).
3. Good cashflow and budgeting can help you release funds to grow.
If you’re finding that your cashflow is strong but you are perhaps are unsure what to do next to take your business to the next level, a strategic financial review may do wonders to show you where you are over- and underspending. As soon as you are aware of the areas of your business where you can reasonably focus more attention (whether that is in infrastructure, staffing, product/service development, or somewhere else), you will be able give your energy to those aspects that lead to business growth. In order to make the most of this step, it is will be of great value to speak to your financial advisor.
4. Do some market research to search out lost/returning customers.
One important consideration in and after a recession is that while there may be businesses that have closed, their customers will need to go somewhere to have their needs/wants met. This means that there is great value in rounding up the customers and clients who are looking for someone else to fill a gap that was created. Take time to find out who your target market is and how to reach them. Also, don’t be afraid to broaden your horizons: if the COVID-19 pandemic has proved anything, it is that new trends can form very quickly as people reprioritise their lives. The faster you move to engage with the lost consumers and clients, the more opportunity beckons your business’s growth.
5. Infrastructure is everything.
If you do not have the necessary infrastructure in place (or if you cannot reasonably expand your infrastructure to increase your capacity), scaling can be extremely difficult, if not impossible. If you have assessed your available assets and resources and deem it to be a good foundation on which to expand your business, you may just have what it takes to increase your revenue by accessing a larger part of the market share in your industry.
Are you ready to assess your business and take the necessary steps to grow and take advantage of the gaps created due to the COVID-19 pandemic? If you do, the world may just be your oyster.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)