Surviving the start-up of a business is to be commended. However, once you’ve built something that can be considered a success (is profitable and shows signs of growth), there comes a time to make the decision to maintain your current performance status or prepare a growth plan to fast-track and support the growth process.
Of course, with any strategic business decision or adjustment in direction, you need to consider how your personal financial strategies and goals factor in and will affect your plans for expansion.
One of the best things you can do early on in the growth phase is get a financial advisor on board to assist you with setting up your personal financial plans to support your business growth goals. It is imperative to recognise that as a business owner your business and personal financial planning (and ultimate success) are inextricably linked.
Here are some key considerations to account for when planning for growth as a business owner.
Avoid the Temptation To Grow Too Fast.
We tend to view fast growth as an exciting and positive event, and it certainly can be, but there is definitely such a thing as growing too fast. Expanding without the right financial building blocks and safety nets in place can result in disaster down the track.
It’s always best to pace yourself and stick to a realistic growth plan that is manageable by your operations team and aligns with your recruitment strategy.
Plan Your Spending!
Maybe business owners embark on business expansion, without really documenting or fleshing out a plan of attack, especially in regards to their spending. It’s best to remember that a plan is a moving document, and can always be altered along the way, but having a guideline to start with will get everyone on the same page and ensure you are strategic with every dollar you spend.
As tempting as it may be to loosen the strings when experiencing a growth spurt or capital injection, the key thing to remember as a small-medium business owner is to rein in your spending as you grow. This means favouring critical investments over unnecessary luxuries. In other words reinvest in the activities that will generate further cash flow for your business.
Prioritise Strategic Investment Without Overspending:
You need to work out the best allocation of resources to achieve the growth goals you set out and what budgets you will set for these. This involves careful strategic consideration as per Pareto’s Principle, or the 80/20 rule – that is, identifying the 20% of your business that results in 80% of the profit. This is where you should allocate a significant portion of your investment funds.
Ultimately, you need to prepare an actionable plan that has considered both the business and personal outcomes you require.
Want more information on integrating your personal and business plans?
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