Barriers to Growth in an Owner-Managed Business
The success and growth of owner-managed and family-run businesses are hugely important for our economy, but these valuable enterprises face a number of unique challenges, especially during periods of growth or significant change. If you are involved in an owner-managed, or family-run business and are keen to grow, we hope this article will help you overcome some of these common barriers.
Barrier 1: Lack of Planning
It is a well-proven fact that businesses with a documented strategy and business plan perform better than those who don’t. Any planned growth comes with an element of risk, and the greater the risk, the more important it is to have a plan that serves as a route map. If you don’t have a 3-5 year strategic plan in place, schedule some ‘off-site’ time with key stakeholders to create your vision and goals. Once in place, you can then create shorter term business, sales and marketing plans. If you find this process difficult, consider engaging the services of a business consultant, who will support you through the process.
Barrier 2: Unstructured Marketing
Most successful businesses ‘keep it simple’. 90% of the fastest growing and most profitable small businesses achieve their results by focusing on their core products/services. Too many small businesses diversify too early or lack market focus. Ensure you have a clear marketing strategy that is aligned with each of your products, services and markets. By understanding the needs of each client type – you can differentiate your offering and tailor your marketing message. Your marketing strategy needs to be long-term – don’t be put off if you don’t get immediate results. If your product/service is good and you are marketing the right message to the right people, the right way – results will come, but you need to be disciplined and patient.
Barrier 3: Resisting Change
With any growth and development there comes a certain amount of pain and need for change. The way you ran your business when it was small is probably not how it needs to be managed now. As your company enters each new phase a different approach is called for. If you are struggling to adapt to change, don’t panic – search and review all the change management material on the site and speak to people that you respect and who have faced similar challenges.
Barrier 4: Working IN not ON the Business
Most owner-managers work long hours. The important thing is to ensure you are spending those hours doing the right thing. You are not there to solve everyone’s problems for them and get involved in every task. You need to make time to work ON your business and not just IN it. Research indicates owner-managers typically spend over 10% of their time building the business for tomorrow. Think about ways you can address the balance, so you have adequate time for reflection and planning.
Barrier 5: The Wrong Objectives
You may have clear objectives but are they the right ones? We recommend you set objectives focussed on how you can achieve greater profits whilst working less rather than rapid growth for lower margins.
Barrier 6: No Financial Strategy – and Poor Controls
Many owner-managed companies in the UK rely on their overdraft as their primary means of long-term finance. There are many different financing instruments available beyond short-term bank borrowing. But you must have a strategic business plan, a robust budgeting process, and adequate financial controls in place before any lender or investor would give you serious consideration. Work with an accountant to create 3-5 year financial budgets and then monitor your actual results regularly.
Barrier 7: Lack of Investment in Self and Team
Can investing time and money in training help you to overcome some of the above barriers? We are a training company so, of course, we will say “yes”, but research proves that smaller firms who invest significantly in training their people are more likely to grow their profits as well as their sales consistently. The added bonus is – the owners are likely to work fewer hours and have more fun!