When it comes to growing your business, do you take it slow and steady or do you go full speed ahead?
According to the American Express OPEN Small Business Growth Pulse, which surveyed entrepreneurs with at least $250,000 in annual sales, 72 percent of small business owners say growth is a priority for them right now. However, the approaches entrepreneurs take to get to growth differ. While the majority of entrepreneurs (63 percent) report taking a slow and steady approach, 25 percent prefer to be aggressive in their pursuit of growth.
Here's a closer look at what the study found about small business growth.
Small businesses are growing. The good news is almost half of business owners in the survey report that their companies have grown "significantly" since launch. That doesn't mean growth is without stress; 49 percent of entrepreneurs polled admit that coming up with new ideas for business growth “keeps them up at night.”
The Takeaway: Growth isn't something that happens once; it's an ongoing process, and one in which you can never rest. If you want your business to grow, you must constantly keep tabs on your market, your competition and your industry. And, as the entrepreneurs in the study know, you've always got to keep coming up with new ideas.
Make a plan or wing it? Four out of 10 entrepreneurs in the survey say their past growth was planned; just 27 percent say their companies grew spontaneously or organically. However, of the entrepreneurs who are prioritizing growth currently, a whopping 65 percent have created a formal plan for growing their businesses.
The Takeaway: As the late Yogi Berra said, “If you don't know where you're going, you'll probably end up someplace else.” Creating a plan for your business's growth greatly increases your chances of success by helping keep you on track despite all the demands of running your business day to day.
Where does growth come from? Small business owners are about evenly split as to the most important aspect of business growth. Twenty-six percent say attracting more customers matters most to growth, while 24 percent say increasing revenue is most important and 23 percent believe increasing profits is key. To achieve these goals, one-third say their biggest growth opportunity is expanding into new marketplaces, while one-third say diversifying into new products and services will give them the best chance for success.
The Takeaway: When we think of growing our businesses, most of us probably think of getting more customers. But that's not the only way to go about it. In fact, it's quite common for businesses to grow their customer base and actually see their profits decline. This occurs when you don't take the time to do financial planning and projections that take into account all the added expenses that can come with growth, such as adding staff or expanding your location. You can also grow revenues and profits without ever adding customers; just try tactics such as boosting your prices and cutting your operating costs.
Small business owners don't grow it alone. More than four in 10 (41 percent) of the entrepreneurs surveyed say networking has the biggest effect on their growth — more than marketing or advertising does. About half (49 percent) say networking with other small business owners, as well as with business experts, is a critical step on the path to business growth.
The Takeaway: Getting ideas, inspiration and referrals from your contacts is a smart way to approach business growth. Don't forget to get help from your SCORE mentor in planning for your own growth strategy. Don't have a mentor yet? Visit www.score.org.