Strategize Your Business Plan to Deliver Your Entrepreneurial Potential
Businesses often get stuck in how they start out – what the market calls a ‘boutique business’. For some small business owners, this is all they want to be. The convenience store owner is a classic example. For go-ahead entrepreneurs, sticking at boutique will never be enough.
Scaling a business from boutique to growth is tough. First, you’ve got to decide if this is what you really want to do. Then you’ve got to figure out how you’re going to do it. You need to view the big picture, and assess the path to successful (and sustainable) growth.
You’ll need to fund growth and scaling too. And let me tell you now, funding your business growth may be a problem for you. Banks don’t want to take risk, and venture capital wants a quick return. Building sustainability is a long-term strategy, and that’s not what private equity wants.
But let’s not get too negative. There are ways to hit that growth path, even in this post-Covid environment we’ve landed in. Hey, if Steve Jobs could ride out the stormy path he walked, and grow despite it, then so can you.
Are you a boutique business?
The first thing you need to figure out is if your business is a boutique business, and then understand what this means.
Now, I want to stress at this point that there is nothing wrong with owning and operating as a boutique business. Except it probably won’t allow you to live the lifestyle you desire and deserve. It probably won’t allow you to do some of the extraordinary things that ordinary people do, either – because you’ll be too busy in your business.
So, what defines you as a boutique business?
There is a hatful of definitions of boutique businesses, but they all center around three factors:
- You keep space and inventory small
- You offer a narrow selection of products or professional services
- You serve a very small and targeted customer base
Are you a boutique business? Measure your business model against these three parameters and ask yourself if increasing revenue has become difficult for you.
Look at your sales funnel. If it’s narrow at the top, your opportunity to add revenue is limited. You may already have noticed that your growth rates have stalled. Any extra cost is hard to pass on to your customers.
If this sounds like where you’re at now, or like where you’re heading, then you must decide if you’re happy in this narrow entrepreneurship.
You can be an ordinary person who does extraordinary things
One of the great things about becoming a growth business is that the increases in revenue and profits you make allow you to be that ordinary person that does extraordinary things. Like Bombas.
Founded by entrepreneurs David Heath and Randy Goldberg in 2013, Bombas has a unique way of creating a social impact. For every pair of socks it sells, it donates a pair to a homeless shelter. A small difference, you may say. Well, as of February 2021, Bombas had donated more than 45 million pairs of socks, all specifically designed to meet the needs of the homeless.
Like so many other entrepreneurs (you can read about a few in my next article, ‘Social entrepreneurship examples: ordinary people doing extraordinary things’), I’m sold on making a social impact. Which is why I’ve chosen to be involved in reviving Newark’s most distressed areas one property at a time, without gentrifying them and moving them out of reach of the people who live there.
If I didn’t have a growth mentality, I could never become involved in social projects like this, because I wouldn’t have the funds to do so.
To be a growth business, first find how to grow
The news headlines are full of doom and gloom about business today. If you listened to all they had to say, you’d probably throw the towel in now. Instead, let’s look at how companies scale in today’s uncertain market.
The answer is relatively simple. Identify and get involved in the sectors that are growing. There are many sectors that are growing and that promise growth way into the future:
- Transport (electric vehicles, for example)
- Green energy
The drivers in these sectors range from the current and potential pandemics, climate change, and poverty. When you’re thinking about potential opportunities across these, think outside the box. Many of them are connected.
For example, poverty can be tackled with more innovative agriculture, driven by new transport models (in the field and delivering food), which requires technological advances. Green energy can be used to power food processing plants and farms, with greater access to supplies provided by the utilization of eCommerce. And where do customers live and work? In the properties built by construction companies, using new, green materials to build. You can go on and on.
The beauty of this is that you can find a niche in which to diversify into growth sectors that aligns with your skills and your social conscience.
(Next month, I will post an article discussing new growth sectors in a little more detail.)
Operational excellence – your key to breaking out of boutique
You can’t hit the road to growth unless your business operations can support it. You need to build operational excellence to unlock your potential. There are four factors that are crucial to this:
1. Embed broad management skills
You cannot build a growth business on your own. You need team members in your management suite that expand on your expertise. These can be people within your business and those associated with it (lawyers, accountants, bankers, etc.).
2. Understand what your business is good at
Within your business you will possess unique skillsets that can be identified as your core competencies – what your company is good at right now. These define where you are on the competitive curve – the areas in which you excel and the areas in which you’ll need to invest to take advantage of the growth opportunities that exist.
3. Automate everything you can
There will be procedures and processes that you should automate. This will reduce human error and the costs of getting things done. This is crucial for businesses that want to scale. You are likely to need to invest in technology to enable this, as well as training people in your business to use the new tech.
4. Fund your growth
With plans in place, you will need to fund your growth.
How to scale your business with creative funding
As I said at the top of this article, funding your growth can be difficult. Unless you’ve got some meat on the bones of your business, private equity firms and traditional lenders are unlikely to finance your growth. If a private equity fund does get involved, the likelihood is that they will want to realize their profit before you’re ready.
What you need is a more creative and flexible way to raise funds for growth. Enter equity crowdfunding: like crowdfunding, except that you give shares of your private company in exchange for cash. There’s no end date like there is with private equity funding. There’s no expensive interest as there would be when borrowing from a bank.
You gain shareholders who believe in you and your growth path, and are prepared to wait for the payout.
(Want to know more about equity crowdfunding? Then message me and I’ll let you know when my article discussing equity crowdfunding as the new way to grow your business is published.)
Success is knowing
If you want to grow your business in professional services or a product market, it’s imperative to know yourself first:
- Is this something you want to do?
- Are you willing to commit?
- What are the reasons you want to go from boutique to growth?
You will need to identify the areas of potential growth that dovetail with your business, the skills your business currently possesses, and those that need to be acquired.
When you develop your knowledge, you’ll be prepared to be brave in business.
With a great business plan, there’s no reason why a more creative approach to raising funds should not deliver the finances that you need to fund the growth that will allow you to deliver your goals and become an extraordinary person doing extraordinary things – the entrepreneur you are cut out to be.
Would you like to hear more? Take the opportunity to book me to speak at your event, your company, or your trade body.