Organisations of any size have greater success if they establish and maintain a solid business plan. This is the most important element for successful sustained growth in business. There are, however, a number of important elements that all businesses need to manage effectively based on the Four Cornerstones of Sustained Growth (Aspirational, Organisational, Market and Financial).
BDO’s Top 10 Tips for sustained organisation growth
1. Cash flow
Savvy entrepreneurs regularly track how their businesses are progressing, and work with rolling budgets and forecasts. They understand their key financial ratios. They know that getting paid on time and managing their outgoings is critical to business success.
2. Access to finance
Usual forms of finance include lines of credit, equipment financing, factoring and commercial real estate loans – these can be tailored to suit your particular business needs and situation.
Don’t forget however that financing your business is not all about loans.
Increasing sales by reducing your prices, and consequently your margins, may not be good business for you. Likewise increasing sales while disproportionately increasing your bad debts or slow paying customers will also cause you grief. Ensure your accounts receivables are healthy and consider strategies other than price.
4. Government incentives: Research & Development
In a competitive environment, companies must continue to innovate in order to reduce costs, improve efficiency, increase asset life and develop new products and services. This drive for an increased competitive position often produces readily identifiable ‘tax’ R&D activities within a company, including activities associated with products, processes, maintenance, environment and test trials. Make sure you understand the Government R&D and grant opportunities.
5. People and resources
With a little effort and creative thinking you can build and nurture a team of efficient, loyal and hardworking employees without spending money you don’t have. Some of the best motivators include simply saying thank you for a job well done, taking the time to listen and encouraging your people.
6. Organisational structures
The difficulty in structuring is knowing how to align the commercial needs of your business with its tax requirements in a way that produces the best possible result. A growing business may have outgrown its current structure, may need to establish new structures, or wish to wind up existing ones. The tax implications can be extensive from a capital gains tax, stamp duty, payroll tax, fringe benefits tax, GST, or even an international tax perspective. Obtaining the right advice on the best structure for your business is critical to sustained growth.
7. Strategic planning
Do you know what metrics you should have on a ‘dashboard’ to run your business?
Focus on the actions that create the results. What are your key performance indicators?
Are they relevant and do the right people know what they are? Do you make sure you schedule in time to regularly review your ‘dashboard’ and strategic plan. Measure more than money, and measure the things that matter.
8. Extracting value
There are a number of ways to extract value, and a full exit may not be the most effective option. Perhaps a partial exit may be an option if you have a strong business that is attractive to investment groups or venture capitalists, and you want to release some cash now but stay in the business until it has reached its next level of growth and profitability.
9. Expanding overseas
A natural consequence of growth can be reaching critical mass locally and looking to expand into overseas markets. The challenges include language barriers, cultural differences, currency exchange issue, conflicting laws and the difficulty and costs of international travel. Nevertheless the corporations that overcome these have a distinct advantage over their rivals – the opportunity to capture important market share. Ensure you take advantage of international trade agencies such as Austrade.
10. Expanding products and services
Identifying where your products or services are in their life cycle is central to your profitability. Effective research into your markets and competitors will help you do this. The stages involve: developing your product, launching your product, growing your market, and product maturity, followed eventually by market decline. New products and services are the lifeblood of all businesses. Investing in their development is crucial to business growth and profitability.
If you would like to talk to a BDO growth advisor, please call Kishen Vijayadass on (08) 7324 6000.