Growing a small business is actually a simple process.  There is a defined and predictable formula to small business growth.  The problem is most small business owners don’t take the time to learn the formula!

While the formula is simple it is not easy.  That’s because there are so many dynamic to a business which distract the business owner from the real variables.  The reality is there are only a handful of variables that tell an entrepreneur the health of their business and where he/she should be focused.  But again, most small business owners don’t take the time to learn the variables.

Monitor the variables; solve the formula – voila, you grow your business!

 

Growing a Small Business – The Process

Growing a business is the same a taking a trip.  You need to know where you want to go and from where you are starting to get a map.  So, know at what stage of growth your business is currently is as important as know what stage you are trying to get to.  To get from one point to then other requires you go through each stage along the path.

The stages are well documented in hundreds of articles and dozens of model.  At DE, Inc. we have distilled them all down in to one simple to understand matrix – The Small Business Growth Matrix.  In a few pages you can understand each stages:

  • Goal
  • Obstacles
  • Owner Objectives
  • Management Objectives

From here most small business owners can get a better idea of where they are and where they need to go.

 

Growing a Small Business – What to Monitor

Growing a small business is all about scaling a profitable cash flow cycle.  The problem is most small business owners don’t understand their cash flow cycle.  I find this is because CPA and bankers tend to describe the cash flow cycle in financial terms.  While cash flow is very financial in nature it is the operational aspects of the business that creates it. Here is a good article that simplifies the concept of cash flow titled Cash Flow: An Entrepreneurs View.

At DE, Inc. we created Tuning Your Revenue Engine as a way of metaphorically describing how cash flow is created in a business.  This approach simplifies cash flow into simple terms that entrepreneurs easily understand and identify the critical variable within a business to monitor the health of the company.  Armed with this key information an entrepreneur can begin to understand the cause and effect of the decisions they make as they attempt to move their business from one stage to the next in the growth cycle.

 

Growing a Small Business – Creating the Plan

Now that you know where you are, where you want to go, and how your business behaves as you make changes along the cash flow cycle it’s easy to write an action plan to get from point “A” to point “B”.  This is what we call ‘high impact business planning.”  It’s not the typical business plan.  It is more of a business project plan with a very defined strategy and goals (which you defined in step 1 of the process).  Knowing where you are heading makes it much easier to define the steps to get there.

Next, use the cause and effect information you collected in step 2 of the process to apply the resources (asset) of the business to completing the action plan.  Now, you have a plan that focuses you on what everyone needs to do to create success and a simple way to communicate it.  Now everyone can pull in the same direction toward the same goal.

 

Growing a Small Business – Simple but Not Easy

Hopefully, this approach clarifies how successful business growth is created.  First, know where you are and where you want to go.  Next, understand how your business behaves as you change different parts of the operation.  Finally, put together a step by step plan that leads everyone where you want to go.

For those of you entrepreneurs that have mastered this process what part was the most difficult for you to master in getting to your destination?

For those of you small business owners not yet there, what step in the process creates a challenge to your success?  If you need help we recommend our BGS Business Accelerator Masterclass, which is designed to lead you step-by-step through how to grow your business.