We’ve recently been reviewing the eight top things growing SMEs can do this year to enable growth and three of the main challenges are;
- Manpower – increasing cost and decreasing supply of skilled workers
- Competition – local and global based on price, range and experience delivered
- Cash flow – leveraging opportunities quickly
Each of these three key challenges feed into an organisation’s growth plan and need to be carefully considered at each stage.
What’s your growth strategy (and execution capability)?
Each company’s growth plan will be different and dependent on various elements. Whatever your plan is, the way in which it is executed will mean the difference between success and failure.
Below, we’ve highlighted three common growth strategies along with points to consider for implementing them in your organisation.
Growth strategy 1: Local v global expansion (or both)
You recognise that your organisation retains a local and limited influence and you want to expand further domestically, internationally, or both. You know that this will mean heavy investment for offices, machinery, staff and systems and you recognise the risks involved in venturing into a new geographic market including language and cultural barriers, compliance with local laws and policies and hiring or relocating staff. There is also the financial burden in the early days to consider.
- Research: Have you fully explored all the costs, risks, laws, policies and requirements for each new location? Even growing domestically will have an impact on your business and each location needs its own careful due diligence.
- Team: Do you have the appropriate people in place to make a new location a success? Are they existing staff who know the current business model or new hires, experienced in the new territory? Ideally you have a mix of both to complement their skills and knowledge.
- Head office support: Whilst you focus on expansion, what’s happening at home? Do you need to promote internal staff (or hire new people) to ensure things remain stable?
- Tracking: Do you have plans in place to track the associated risks and successes? Do you have a time or cost limit before you decide that the growth has been achieved effectively or you pull out?
Growth strategy 2: Core business v increasing product base
Your core business generates steady profit but you want to add more focus to the main areas for growth and eliminate other, less profitable ones. Conversely you might want to expand your product offering because you have an engaged customer base creating demand for more products.
- Smart insights: You’re basing a lot of risk on customer feeling so are you sure you are gathering enough of the right kind of data on which your decision is based?
- Reliable supply chain: Can you order, manufacture, store and deliver the new or increased levels of products you want to offer to beat (or at the very least match) the competition?
- ROI: Have you established the timeframe within which your initial investment has been returned and profits can be seen? Do you have a risk point at which you will either further expand your product range due to its success or pull back on any further expansion?
Growth strategy 3: Improving systems
To grow a business and increase profits you might not need to look any further than your existing processes and systems. Your growth strategy could literally be staring you in the face each time you use an inefficient computer system. Taking the time, effort and money to improve how you work as an organisation, from the inside out, could later mean even more growth via one of the above two strategies.
- Technology to last: Do the current systems in place set your business up for success today, and in the future? Are your systems integrated to provide your customers with a seamless service delivered by staff who are empowered with reliable data and infrastructure?
- Automation and replication: Can duplicate processes within your organisation be performed automatically with minimal human input? Can this system be replicated quickly across new locations, partners and suppliers when needed?
- Generate growth potential: Does the new technology provide a platform to highlight growth potential and develop new business areas based on real-time, accurate data?
It’s an exciting time when an organisation is in full swing of a growth plan and SAP partners can offer extensive support for SMEs wanting to start, or continue their growth journey.