the challenge of growth in business five critical tasks

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The challenge of
growth in business:
ve critical tasks
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The challenge of growth in business: five critical tasks
Table of contents
Introduction 5
Options for expansion 6
Market research 8
Develop a business plan 10
Financing 11
Making the most of current technology and software 14
Freeing up capital 16
Conclusion 16
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The challenge of growth in business: five critical tasks
Introduction
Although the current economy is still struggling, it does not preclude an
opportunity for you to grow your business. In fact, it may serve as a defining
moment for business-savvy managers and entrepreneurs to build strategies
that will best serve today’s complex environment and help drive the nation’s
economic recovery. This white paper discusses five critical tasks for managing
growth and includes ways to free up capital to finance your expansion plans.
The five critical tasks for managing growth are:

Consider all available options for expansion.
Conduct thorough market research.
Develop a sound business plan.

Secure the best available financing.
Make the most of current technology and software.
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Once you have decided you want to grow your
business, you have a multitude of avenues to
consider. Much depends on your type of business,
as well as what resources are available to you.
An obvious option for growth (and probably the most common
one) is to open an identical business at another location. If your
current business is doing well, you may be able to tap into a new
customer base, and you already have the experience to run the
business successfully. You could even consider a location in
another country, although this would require a great deal of
research, knowledge, and expertise. (It might be simpler just to sell
to a foreign market by finding a foreign distributor for your product.)
Thinking outside the box, you might also consider partnering
with a related business. There is such a partnership in a coastal
community called “Worms and Coffee,” where local fishermen
can purchase bait and coffee at the same location. While that
may seem a bit extreme, we all know of the trend a while back
where a coffee shop would rent space inside a bookstore.
Complementary products increase sales for both businesses by
bringing in new customers.
Another tactic is diversification. Diversification both attracts new
customers and allows you to sell more products to your current

customer base. When you have earned a good reputation in the
marketplace, you have also created a degree of trust from your
clientele that can translate into the sale of other products. The
principal advantages of diversification are the lessening of risk
and the opportunity for increased profit. Risk is minimized when
Options for expansion
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The challenge of growth in business: five critical tasks
the rise and fall of sales becomes more level throughout the
year by selling additional products or services with a more
varied or different demand cycle (for example, selling both
water skis and snow skis). If you are a manufacturing
company, production facilities can often be utilized at a more
optimal level. Personnel can be cross-trained and greater
efficiencies can be achieved. There is also the potential for
cost savings through shared resources among diversified
products, as well as increased sales through the potential
bundling of products and services.
One of the more popular techniques today for expanding a
business is to increase your company’s presence online. Internet
sales and social media can enable you to reach customers you
might otherwise not have the chance to sell to and have proven
to be quite cost effective. Not only does it simplify reaching
potential customers in different geographical areas, but it is also
an extremely cost-effective marketing tool. A website enables
you to stay in touch with your current customers, find new
customers, and, with the addition of a “Frequently Asked
Questions” section, may even reduce your customer support
time. This is an area where it is usually best to have an outside

consultant do the design work. Whether you are creating a
website for the first time or if you simply need to improve an
existing site, an experienced consultant may allow you to make
considerable inroads into untapped markets for your business.
Diversication both
attracts new customers
and allows you to sell
more products to your
current customer base.
One of the more
popular techniques
today for expanding a
business is to increase
your company’s
presence online.
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Through market research you can gain a better
understanding of your target market, allowing
you to create a plan to reach that market
successfully. Before you do anything, you first
need to understand both the needs of your
customers and what the current marketing
trends are. Because this is such an important
task and one that requires a great amount of
expertise, you may want to hire an agency that
specializes in market research.
Polling your current customers is an often used
technique when performing market research.
However, simply talking to customers is not
going to work if you don’t first know the

correct questions to ask in order to gather the
information and data you need. Even the
phrasing of each question can make a notable
difference in the quality of the results.
While market research can show ways
to improve existing products, it can also
identify new products and find new business
opportunities. There is no point in investing in
the development of new products or services
if the demand for them won’t be high enough
to support the cost. The budget spent to
ensure sufficient demand exists will pay for
itself in the end.
Market research
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Market research is another key critical task if you are looking to grow your
business. While market research does take a lot of time and patience, the
rewards can make it very worthwhile.
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The challenge of growth in business: five critical tasks
Pay close attention to your competition and
learn how to differentiate your company from
theirs. Determine what your company’s
strengths are and what you do better than
others in your field. Then you can promote
whatever makes your product unique.
Market research can also be used to help
develop your marketing plan. Having an
effective marketing plan in place is essential to a
successful business expansion. You will need a

budget, of course. However, remember that any
marketing plan should not be set in stone. Keep
an eye on the return on investment (ROI) and
adapt your plan when needed to maximize your
results. Conducting thorough research can
greatly minimize the risk of improperly investing
money in the company’s expansion.
And, finally, market research can also include a
study of whether you have priced your current
products correctly. Setting a fair price is crucial
to any company’s success.
Understanding your product (or service), your
market, your customers, your competitors,
and your industry will go a long way toward a
successful growth plan. With good information
at hand, you can reduce the risks by identifying
foreseeable problems and also discover new
sales opportunities.
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Developing a business plan is important for both finding investors
as well as keeping your company on track to reach your targeted
rate of growth. Of course, any business plan you create should
follow the company’s mission statement. The process of
developing a business plan will also assist you in identifying
both the weaknesses and strengths of the company.
Describe, in detail, the company’s products and services offered.
Include the benefits offered to your company’s customers. Give
information about competitors and describe any obstacles that
must be overcome to succeed.

Include the information from your market research and what
your market strategy will be. Explain the growth potential. Be
sure to include any compliance issues with governmental
regulatory requirements and how you plan to meet them.
Always include information on the qualifications and experience
of your management team. Potential investors want to know
your managers understand the market and your business and
that they have the expertise to successfully manage its growth.
Provide past financial statements (usually from three to five years)
and forecast the company’s income for the next five years.
While a good business plan is essential to attracting investors,
it also should set the course to follow in the future and help
manage business priorities.
Creating a business
plan forces you to look
objectively at your
business and identify
any areas of risk.
The process of
developing a business
plan will also assist
you in identifying
both the weaknesses
and strengths of the
company.
Develop a business plan
A business plan is always needed when planning a new business, but it is
also just as important when you are thinking about expanding an existing
business. Creating a business plan forces you to look objectively at your
business and identify any areas of risk.

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The challenge of growth in business: five critical tasks
This is where having a well thought-out business plan is invaluable. What is the degree of risk for
your expansion plans? This will affect your cost and what financing will be available to you. Before
applying for additional capital, you’ll need to know your specific needs. Remember the strength of
your management team is important to anyone who is considering investing in the company.
Some businesses will approach business acquaintances or even family or friends for the needed
funding. Sometimes the investor will ask for an equity stake in return, and then you have to decide
if you are willing to give up some amount of independence. However, if this does occur, you could
include a contract clause allowing you to buy back their stake at some future time.
Find out what the business loan requirements are at local banks. Get to know the branch
managers and establish a rapport with them.
Financing
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While it is true our economy is struggling at the moment, there are still lenders
who are willing to invest if you know where to look. Just realize that the lending
criteria are a lot stricter in today’s market.
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“Angel investors” are individuals
who are looking for a higher rate
of return than a traditional
investment.
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The challenge of growth in business: five critical tasks
You can also look for state and federally
funded loans and grants that may be available
depending on the type of business. There may
be special criteria to qualify, but if you don’t at
least look into this, you could miss out. There
is a wide range of different types of government

grants: everything from providing funds to
encourage technological innovation in the
private sector to funding businesses that
create products and services that improve the
environment and human-health conditions in
urban areas.
You might also consider looking for business
angel investors. “Angel investors” are individuals
who are looking for a higher rate of return than a
traditional investment. They often have business
experience and may want some type of active
role in the company’s management in exchange
for their financing.
Another possibility is to seek funds from your
company’s employees. Many companies use
an Employee Stock Ownership Plan (ESOP)
as a source of equity financing and as a
motivator. Not only do employees then have a
stake in the business’s success, but such an
investment protects their current employment
as well.
Some companies have used factoring, as it can
provide funding quickly. The factor purchases
the company’s accounts receivable at a
discount and thereby gives the company an
immediate cash infusion.
Securing capital for business growth in a
struggling economy can be a challenging,
stressful, and lengthy process. It is essential
to explore all possible options available to you.

The annual report published by Pepperdine
University
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reveals that 59% of small business
owners surveyed found it difficult to raise new
financing and only 33% of those who applied
for bank loans were successful. But being
difficult to obtain does not mean impossible
and there are alternatives to bank financing. In
any case, in order for financing to be secured,
investors must believe the business has the
potential for significant growth. And, of course,
once financing is located, make sure it is both
sufficient to see you through the initial expansion
period and has some cushion built into it.
1 2013 Small Business Economic Forecast and Pepperdine Private Capital Access Index Quarterly Report (Second Quarter 2013).
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The advantages of applying today’s technology
are several, but what comes to mind first is
improved efficiency. It’s simple: Time is money.
Having the correct information available to you
at all times is often the key to a successful
business, and technology can do much of the
necessary work for you. It can collect,
process, store, and report on essential data to
help a business run smoothly. Increasing the
speed that information can be shared with
both employees and customers results in
faster and improved customer service,
promoting business growth and success.

There is a wide variety of available software for
business information systems. For example,
there is software for planning, fixed assets
management, inventory tracking, sales tracking,
and purchasing and ordering systems.
Having the correct software in place can give
you the important tools needed to increase
productivity, decrease processing time and
cost, increase you share of the market, and
help to reduce risk. Less human involvement
often means lowering the risk of error. Plus,
software never takes a day off, never gets ill,
and is willing to work for you 24/7.
Making the most of current
technology and software
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Making the most of current technology can mean all the difference between
the successful growth of your business and a failed attempt.
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The challenge of growth in business: five critical tasks
Cloud computing is a great strategy to expand
your business operation. It allows for greater
mobility and ease of access, which older
systems did not address. One of the greatest
advantage of cloud computing is that it allows
businesses to grow independently of their
various locations or distance between offices.
And think of the cost savings when you migrate
to the cloud: you no longer need to spend time
on updating, adding servers, installing antivirus

software, or making backups. Furthermore, you
can be sure you will always have the very latest
software available without any of the trouble of
installing it.
Yet another strategy for growing your business
by using new technology is to make the most of
e-commerce. Consumers have become quite
comfortable with buying online and the benefits
of the additional exposure for your business are
endless. Internet sales save both time and
money, with seemingly endless potential.
An investment in technology can keep your
business growing. Do not overlook the fact
that technology, while needing an initial outlay
of capital, can, in the long run, reduce costs
and increase profitability. It can also optimize
productivity and reduce risks, all of which
adds to increased business growth. Of
course, the world of technology is always
changing, so it is vital to keep both hardware
and software up to date.
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Freeing up capital
You will usually need additional capital to fund the
growth of your business. However, before you look
for financing (or as a supplement to it), you should
take a good hard look at your operation and see if
there aren’t some overlooked ways of saving money
here and now.
One approach to free up capital is to outsource certain jobs.

There are many facets of the workplace that can be outsourced
successfully, such as communications, payroll, and bookkeeping.
By doing so, you are able to take advantage of businesses that
specialize in particular areas. Outsourcing may allow you to
complete certain tasks quicker and with less investment in
personnel. Therefore, outsourcing can cut costs and raise profits.
Another idea is to install appropriate software that will help you
to improve efficiency and thereby free up both staff and funding
to support your expansion plans. Fixed assets management is
just such an area that, in many companies, can benefit from
some improvement.
Here’s an example: There are still companies today that are
using spreadsheets to manage their fixed assets. This is a
costly practice for many reasons. To begin with, the number of
man hours spent in updating the fixed assets spreadsheets,
plus the time spent researching any changes to the tax
regulations and GAAP rules, can be overwhelming.
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The challenge of growth in business: five critical tasks
Fixed assets management software can assist your
business in the following ways:
• Provides a method for recording all of the essential
information about the company’s fixed assets
• Produces a wide variety of reports simply and quickly,
providing you with either summary information or details
about individual assets
• Keeps the necessary paperwork with each asset, as you
can attach a copy of the maintenance record and warranty
to the record of each asset
• Prevents unauthorized changes to the asset records and

reduces the possibility of errors
• Accurately depreciates all fixed assets for both GAAP and
tax purposes, using the very latest rules and regulations
• Prevents ghost assets (that is, property that is either broken
or lost) from remaining on the books and thus prevents the
overpayment of insurance and property taxes
• Prevents zombie assets (that is, assets that are in use but were
never recorded) from being uninsured and not depreciated
(thereby missing a legitimate expense)
• Tracks all assets with the use of a barcoding system
All of the above effectively frees up both staff and funds to
support your expansion plans.
There are many facets
of the workplace that
can be outsourced
successfully, such as
communications,
payroll, and
bookkeeping.
Fixed assets
management is just
such an area that, in
many companies, can
benet from some
improvement.
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Conclusion
If you want to successfully grow your business, you
need to accomplish five critical tasks: consider all
options, perform thorough market research, create

a sound business plan, secure sufficient financing,
and make today’s technology work for you.
Even with the completion of these tasks, you should be aware
of the possible risks. The worst scenario occurs when a business
overextends itself and faces financial ruin as a result. However,
even if a business suffers an economic setback that is not
serious enough for it to close its doors, a company can still lose
its reputation, as well as valued employees. Such losses may not
be entirely evident at first but, if caught in a downward spiral, can
seal a company’s fate and ensure its demise.
These are just some of the reasons that it is so important to
correctly handle the company’s growth, giving your full attention
to these five critical tasks. Although the risks of growth are great,
you need to keep in mind that the successful expansion of your
business offers even greater rewards. What sets companies
apart from those that didn’t survive is how they approached that
growth. By completing these tasks, you will stand the best
chance for success.
The challenge of growth in business: five critical tasks
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