Many companies face barriers which prevent them growing to their full potential. These barriers can cause a gap in growth, which I call a “growth chasm”. To overcome these barriers and to make the ‘leap’ to the next level companies must consider major challenges to their current growth strategies.
Evaluation
Where companies have had roughly the same level of profit and turnover for several years and considerable value already exists in their business, it’s a case of evaluating the next steps the company should take to grow significantly. Often this requires exploring new markets, implementing new systems, recruiting new people and raising finance.
Implementing change
Through implementing change management skill sets may be challenged like never before, possibly placing people out of their comfort zones. Consider leaping out of bed 30 minutes before necessary. Everything in your body screams not to continue and you make excuses. The warmth, comfort and security pulls you back. But a shock to the system can bring about great results.
Understanding the risks
Embarking on a growth journey is a risk many companies delay or never make.
Alongside barriers to growth are the concurrent risks for shareholders. Understanding this is key to the regional and national economy. SMEs have a role to play; they produce over 60% of our GDP.
In the early days, business owners risk a lot. Personal guarantees, possibly leaving another job, buying or inheriting the business from another generation. Back then their attitude to risk was less inhibited. Now, older, maybe wiser, they have more to lose, but also a great deal more to gain. Overcoming barriers through the evaluation of people, operations, strategy and customers and can facilitate an increase in company value.
An understanding of this from the shareholders/directors and banking point of view is fundamental to the recovery and sustainability of the UK economy. Many businesses are sat on cash. At Plc level the FTSE 350 debt to profit ratio has tumbled. But the same goes for the high-end owner-managed corporate. My banking friends face a battle to generate lending, and current debt arrangements have high run off rates. Debt is being paid down as fast as it is lent. I truly believe this is due to the barriers to growth influencing risk adverse shareholders rather than the banks being reluctant to lend.
I lead BHP’s Consultancy service line, which can help directors to really get to grips with the steps they need to take to maximise their companies’ potential for growth.
