A BDC study presents four strategies to overcome the challenges faced by entrepreneurs who want to grow their business.
BDC has asked more than 1 000 heads of small and medium-sized businesses across Canada to give us their perspective on growth; the results are very revealing.
A large majority of them want to grow their business, whether it is already growing or not. In the question of how important growth is for a business, respondents rated an average score of 7.1 out of 10, and 38% rated 10 out of 10.
The challenges of growth
While growth provides many benefits, business leaders have also identified some of the challenges it poses (e.g., financial pressures, human resource burdens, difficulty in imposing fierce competition and knowledge new technologies, market trends and competitors).
BDC asked SME executives to identify strategies to overcome these challenges. She also invited her business advisors to advise on how to implement each of these strategies.
1. be a customer-centric business
An overwhelming majority of respondents, or 99%, indicated that knowing and responding to clients ‘ needs is a decisive factor in ensuring the growth of their business.
To help you, BDC advisors offered some advice.
First you need to know your customers better. Where are they? Who are they? What are their values, their interests and their way of life? How do they like to do business with you?
To get to know them better, research using secondary sources (reports, surveys, etc.) or do your own analysis from interviews, focus groups and polls.
It is generally said that 80% of sales are generated by 20% of customers. So try to understand your best customers and cultivate their loyalty.
Invest in a customer relationship management system to allow your team to have centralized access to relevant information about your current and potential customers.
2. build a winning team
Our study indicates that executives of growing businesses are very interested in human resource management. For 85% of them, this translates into better training for employees, while 72% consider the hiring of more competent staff to be a priority.
Here’s what our business advisors suggest to apply this strategy in your business:
Establish a human resources management plan that provides for your staffing needs, addresses relevant issues, and defines how to retain and motivate employees.
Assess the skills of your employees to identify gaps and develop training and hiring strategies to fill them.
Prepare clear job descriptions, performance goals, and assessments to make your employees productive and strive to always give the best of themselves.
3. stay at the forefront, innovate
According to our study, eight out of ten respondents consider innovation essential to the growth of their business. As well as understanding and satisfying customer needs, innovation is one of the growth strategies used by respondents, regardless of the pace of growth, size or location of the business.
Suggestions from our advisors to stimulate your company’s innovation capacity:
Gather ideas and feedback from vendors, customers and other stakeholders. Also leverage the creativity of your employees; they know your business and your industry and are often your best source of ideas.
Collaborate with your team and maintain an innovation strategy to improve your products and services, processes, marketing, business model and supply chain.
Innovation is not necessarily synonymous with inventions or radical changes. It is also made of gradual improvements in products, processes and solutions.
4. invest to be the best
Growth often depends on the resources invested in the business. No wonder three out of four entrepreneurs indicate that they have invested in the expansion of facilities or the acquisition of equipment and technologies to increase production capacity.
Here are the recommendations of our advisors to help optimize your investments:
Explore thoroughly what the market has to offer before any significant investment.
Focus on turnkey technology solutions rather than tailor-made application development. The latter are often more costly in the long run and create dependence on the supplier.
Minimize the impact on your cash flow by financing your growth through commercial lending instead of cash. Opt for loans whose repayment terms are consistent with the expected duration of the assets.
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