The growth of a business is arguably the defining characteristic in achieving success. Business owners of all shapes and sizes have the core vision of growing and increasing their revenue and following, however too many companies go about executing growth without the key foundations in place.
Structuring for growth is a unique planning situation where so many different aspects of a business and beyond comes into play. An integral and well-versed groundwork is vital to address and adhere to, allowing you to enter a growth project with the correct tools, resources and mindset to accomplish.
We spoke to Nordens’ Director of Strategic Consultancy, Joe Sword, on how to successfully co-ordinate a structure for growth, whether success can be achieved without one as well as some of key takeaways from successfully executing growth strategies.
Just how important is having a solid structural foundation in place if a business wishes to expand and achieve growth?
It’s massively important. You look at businesses that grow and have problems when they try to scale, and this is often because those foundations are not in place to start with. When we talk about foundations, this can mean both physical and interpersonal processes. It starts at the very top of a business, if they are in a partnership or there’s multiple shareholders, it’s vital that everyone is aligned with the key vision of a business. Of course, everyone will have differing opinions on some aspects of the company but making this absolute and concrete is so important as essentially everyone is reading off the same hymn sheet. This then extends through to senior management, middle management and all other employees, creating a culture that becomes embedded and synonymous.
Having the core systems and processes in place is also critical as it allows you to scale consistently without compromising your customer base or your operations performance. We’ve seen some horror stories over the years where businesses have overtraded and are looking to grow very fast. This has unfortunately resulted in the company not being able to keep up and has caused many problems which has ultimately damaged their reputation beyond repair and left the business in a worst place than previously.
What are the basic principles for a business to successfully structure for growth and what needs to be avoided?
It comes down to managing people and their expectations, not promising them the world if you can’t deliver it. Leaving yourself a backup plan or a contingency model shows caution yet trust in your business. Make your communication and messaging relative to the business moving forward in terms of growth as keeping everyone; staff, suppliers and clients, are in the loop which shows solidarity and provides more incentive for them to go above and beyond.
Setting out your growth plans and regularly analysing and testing them allows you to become well-versed, increasing the chances of successful growth. Exploring different ways to improve efficiency within your systems and processes is also vital in my opinion. People may be productive doing a particular role, however if that role can be automated, possibly digitally, it frees up that productivity in other areas of the business where it could be a huge asset. A good business owner is always on the lookout for gaps in their company, and things to improve upon.
A good grasp of your financials is imperative. Knowing your cashflow forecasts and profit forecasts inside and out, whilst regularly critiquing them against different scenarios is crucial. If things don’t go perfectly, which for many businesses has been the stark reality of the past 12 months, you need a plan B and a plan C to leave you in the best possible position whilst leaving you in full control. This also relates to knowing exactly where your growth derives from, which for many is sales and marketing. Fine tuning these parts of a business and potentially taking risks could provide the fuel for a growth plan, especially if you’re pushing for rapid, immediate growth. These are all the basic principles of achieving growth and setting the wheels in motion so to speak.
If a business comes across an immediate and sudden opportunity to achieve growth and it has to be taken quickly, would you advise on going through with this if the preparation hasn’t been put into place?
This is a very good and important question. I love to advise businesses in ceasing opportunities and sometimes these have to be completed as soon as possible or over a short time period. However, this is exactly why you need to surround yourself with trusted partners as access to quality information is vital. If the access isn’t there, then you’re potentially entering a growth project blindfolded.
A good business owner should have all this information ready at the click of a button, just in case something huge occurs. You need to be asking yourself questions as soon as something like this is on the table, can we make this happen and can we facilitate this with our current systems and operational processes? Preparing for this through regular analysis of your books and financials will put you in the most well-informed position to make the best possible decision.
Everything is all situational and circumstantial, however going ahead with something that is make or break for the business on a gut feel is difficult and it can spell failure. Some form of financial modelling is the bare minimum if you’re looking to achieve growth so therefore I wouldn’t advise anyone going into a growth project without the preparation already in place.
Is negative scenario planning effectively the same in guidance as structuring for growth. If not, how are they different?
I think negative scenario planning is definitely an area of structural growth. Negative scenario planning for me is the process of regularly stress testing your plans to see if they hold up against the worst possible outcome. I think it’s such a healthy exercise for businesses to undertake, especially considering we’re in the midst of a global pandemic which no one could’ve predicted. If you can feel reassured that if the worst possible thing were to happen, the business would still survive and be in a relatively stable position due to contingency reserves accumulated, then this naturally exudes confidence.
That being said, doing negative scenario planning alone will not help you to structure for growth. Growth is naturally a positive exercise to do and thinking optimistically whilst taking risks is essential. However, you do need to balance it with the insurance of risk assessment to counter-act the unknown opportunities which may be taken. I don’t think it’s the same but it’s definitely a key component of structuring for growth which I advise all business owners to undertake.
Are the foundations and preparations attained different if a business were looking to achieve growth internally (change of leadership or senior management) as opposed to externally (merge or acquire an existing company)?
The core principles I think would still be the same, however the considerations within those principles would potentially change considerably. For example, a huge component within both internal and external growth is the team as well as your management skills in handling them. If an internal growth project were looking to be achieved, then you’d need to focus on who is stepping up to the plate and who would then lead on certain facets of that particular project, whether it be a change of leadership or potentially a new department or service being introduced. How would this then affect the flow and seamless running of the business and what other resources are needed in order for this to be executed successful, these are key questions which need to be addressed thoroughly. Externally, you want to figure out how outside members of your organisation are going to buy into the vision and culture of your business. Opening up their mind and getting them to believe and adhere to this can take time and naturally a slight restructuring of your original planning and preparation.
There will be obvious key areas of focus that determine whether growth can be attained, especially when it comes to systems and processes again. If you’re acquiring an existing company, merging and adapting to one overall system needs dedicated and close attention, particularly in its early stages. On the other hand, if you’re looking to grow internally and using an organic, less risky model then it’s just about fine-tuning and revisiting the analysis of these processes. On average, your considerations will be on a much wider scale when looking to grow externally as opposed to internally, however the formation and planning will be touching upon the same areas of focus. The reward payoff is likely to be increased when going through external growth, however this is then counteracted in terms of risk rising.
Does the size and a scale of a business play a huge part in the type of planning and assembling that occurs through structural growth?
The size and scale of the business versus the size and scale of the opportunity is a metric which forms the backbone of the structural growth plan. It’s all relative, if you have a comparatively small or new business model which turns over £50,000 for example and you’re looking to increase that to £1million in a year, then it’s hugely ambitious and incredibly difficult to manage. If the target was instead to double turnover and further increase that over time, it’s much more feasible and less daunting. The bigger the business of course means more work in preparation, however setting a timeframe and quantity target of a growth project allows you to dictate and control proceedings and how quick you will need to act.
I think it also all comes back to stress modelling. Hypothetically, if the £50,000 business were looking to achieve this rapid growth of £1 million turnover, then certain criteria again need to be analysed. If there are gaps and problems in operations, systems and processes when your turnover is £50,000, then it’s imperative to fix these immediately in order to match the quickfire speed of the growth project.
Do you consider yourself to be successful in previously executing structural growth for Nordens and what are some of the lessons you have learned from going through this?
I’ve been very fortunate in that I started out at Nordens when we were a small accountancy firm with a low number of staff, and have since seen the growth of the business through exploring new avenues. I’ve learnt a lot of lessons and the biggest thing I’ve taken away from going through this is that planning and communication are so vital. In my view, you can never do enough prep work when it comes to structuring for growth and where there are things miscommunicated and not understood by your team, it can really cause detrimental problems and unrest which could impact the life and soul of a business.
I think you also need to be real in that virtually every major challenge in life, whether that be in business, childbirth, or a personal milestone for example, it hardly every goes perfectly to the script laid out beforehand. Regular communication and being able to adapt with the correct foundations in place are the driving forces behind achieving growth in any capacity.
Being ruthless yet reasonable with your business, your team, your costs and yourself, provides accountability and a motivation to succeed. Likewise, being confident that you’re able to handle the worst case possible can transition easily into having the certainty to tackle the best case possible. Once these seeds are sown, it provides the platform to grow and prosper to the best of your abilities.
We hope this has outlined to you how to structure for growth appropriately and things that need to be considered in order to take the next step with your business. If you require any more information on the strategic advisory programs we provide, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
We’re now also offering COMPLIMENTARY Strategic Consultation Sessions up to 30th June 2021. Please contact Nordens’ Director of Strategic Consultancy Joe Sword at firstname.lastname@example.org or 020 8530 0720.