In today’s world the growth of a business is critical and is challenging. With inflation adamant of not coming towards south and travelling north direction, RBI hiking the rates (further rate hike on the cards), economy is not so stable, Forex not steady, heavy competition, the business is put to lot of stress on its growth aspects and increase the risk factors.
Let us see what the factors for growth of a business are.
Strong business strategy: The business should have a strong strategy for its growth, either organic or inorganic.
Top line v Bottom-line: It should be clear on the growth aspects, do not ignore the bottom-line for the top line growth.
Market leadership: Unless you are a leader it is difficult to sustain the growth.
Differentiator: Not only a leader, but you need to be a differentiator with your product or services.
Sound financial position: Financial prudence is critical for a business growth. Have a good finance practice.
Focus on core businesses. Develop on the strength and management should concentrate on the core businesses, which yields good results.
Diversify known businesses: Do not diversify into unknown areas or unrelated areas. This will put strain on the management, as they have to spend time on the new one and focus will be lost on the existing business.
Monitor the external environment: Keep a watch on the external factors like the other countries economy (wherever you have operations), political stability, tax regulations, Government policies, etc.,
Challenges for growth
It is easy to prescribe the factors for growth. Is it something that can be achieved, so easily? There are challenges to that. Let us see some of them.
No / Lack of strategy: In most of the cases, the strategy was missing or not being clear. This is very critical for growth.
Communicating the strategy: Having a clear strategy is not that important. It has to be communicated to the stakeholders and should have their buy-ins.
Personal v Professional aspirations: Sometimes, the professional vs the personal aspirations come in the way of growth. This is true in case of a person driven business.
Operational level challenges
Funding – if funding is not available at the right time, growth is at risk
Talent – you need to retain the talents to achieve the growth. It is the talent which works for the growth of a business.
Risk taking ability – business need to take calculated risk, to stay in lead.
Ability or willingness to change – if the business still in the traditional way of working (like technology), we have grown in that way attitude, it has to change. It is not only ability but also willingness to change is a success factor.
The Biggest Risk is Not Knowing the Risk- If you do not know your risk, better know it or forget your business. Ignorance will not help here. I would categorize the risk as CFOS.
Compliance risk – something this will destabilize a business (eg. Pollution control)
Financial risk – if you do not have your homework done properly in this area, you are inviting trouble. Example: Mix of Debt/Equity, not generating cash, borrowing at high rate (higher than your business return) etc.,
Operational risks– Destruction of facility, non-availability of resources etc., A good disaster recovery plan / Business Continuity Management Program will help a long way in mitigating this risk.
Strategic risk – if your strategy itself is not correct, you cannot expect to grow. You need to course correct the same, as you move on. Review it periodically.
To sum up, if you want to grow, the following points have to be kept in mind:
Focus on your strategy
Engage customers – they are the one who gives you the business to grow.
Engage employees – they are the one who helps you to achieve the business requirements.
No compromise on quality – AT ANY COST. If you compromise, you lose even your existing business.
Open to change- Be open to change. Traditional working will not work for long.
Monitor the external environment – this is critical as it has direct impact on your business.
Diversify – in known businesses and do not lose focus on the core business.