How do I expand my business while keeping costs down and quality high?
I run a corporate catering business, employing 50 staff and have several blue-chip clients. I want to take on more work, but feel that to do this I will need to take on more staff and move to larger premises. I don’t want to significantly raise my expenditure without first securing clients, but don’t feel I can offer the same quality of service without the company growing. What should be my first steps in this expansion?
A. Alysoun Stewart of Grant Thornton writes:
Growth usually reaches a series of plateaus and then requires a big step-up to reach the next stage. To achieve this, in a way that minimises the risk of overextending the cost base in advance of new revenue streams, requires the development of a structured and detailed expansion strategy which addresses every area of the business and determines what is required to achieve your objectives. Start by considering the following questions:
1. What are your strategic goals and when do you wish to achieve them? How big do you want to grow, are you working towards an exit, how will you measure your success?
2. How do you ensure decisions are evaluated against your core strategy? Do you and your management team understand the trends within your sector and do you have the ability to deliver the right value proposition now and in the future?
3. Have the employees who will be crucial to delivering the next stage of growth been identified? Are they up to the task? Your business relies on good service, so a strong team is vital for your future growth.
4. Is your business equipped to compete with larger players on an equal footing? Consider how the business will respond to increasing price competition without the critical mass to absorb low margin contracts; whether it is necessary to develop a broader offering in order to secure market position; and the way in which processes are designed to ensure that every sales opportunity is maximised.
5. Do you have processes and infrastructure in place to achieve the next stage of growth and to deliver the flexibility necessary to respond to the constant changes in demands of this market sector? You will require more robust processes and systems across the board, and in your sector operational efficiencies are fundamental to profitability.
6. Do you have the funding structures and financial controls in place to provide the stable platform for growth? Is your working capital management strong enough to avoid the potential impact of over-trading? Are your pricing policies regularly reviewed to ensure you maintain the right balance between profitability and competitiveness?
Once you have thought through your response to these issues, just go for it; you are likely to be better placed than the rest of the field.