Prepare for growth

Being growth-ready means building strong foundations so your business can take on more work without losing quality, profit or control. When the New Zealand economy is restrained and things remain steady, you have an opportunity to review your capacity, cash flow and creative growth ideas. Below you’ll find things to consider, answers to common questions and a growth checklist.

Decide what growth should do for you

Growth looks different for every business. You may want more profit, more regular customers, a new service, or simply more of your own time back. If you’re aiming to grow, the first step is to decide why.

For example, you could be aiming for one of the following:

• Grow profit from your most valuable service.
• Improve repeat sales from existing customers.
• Build enough capacity to take on a bigger contract.
• Cut the time you spend on routine admin.
• Test demand for a new product or explore a new market.

A clear goal helps you spot which opportunities are worth chasing and say no to opportunities where your effort won’t generate the progress you want.

Find out which work earns you the most

Whatever your growth aspirations, it’s important to understand which parts of your business bring the best profit.

Analyse each product, service or customer group to get a clear picture of both costs and prices. Add up the full cost of delivering the work, including materials, labour, travel, software, contractors and your own time. Compare this with what you charge. You also need to consider the role they play in your overall offering. For example, one small size or add-on may not be profitable alone, but it draws customers in to buy a key item because they know you have the best range.

You may find your busiest work isn't your best earner. Another service could be more profitable, more enjoyable to deliver, and easier to repeat.

As you do this review, consider whether your pricing strategy and levels are up-to-date. Costs can creep up over time while prices often stay the same. If you don’t make the necessary adjustments, you can erode your profit even as you sell more. In our other articles, you can find ideas to help.

Communicating price increases with confidence

Finding a pricing strategy that sets you up for success

Cutting costs without compromising quality

A Business Mentor can help you ask the right questions. Which work brings the strongest margin? Which customers pay on time? Which jobs create the most stress? The answers show you where to focus your energy.

Protect your cash flow as you plan ahead

Cash flow matters at every stage of business, and it matters even more once you take on more work, buy stock, invest in equipment or hire someone. Even when you’re thriving, waiting on cash from sales can prevent you from buying more stock or paying rent, jeopardising everything.

You should maintain a 12-month cash-flow forecast that shows your expected income by time and amounts as well as your expected costs, including GST, tax, wages, rent, loan payments, stock, equipment and quieter trading periods.

Your forecast can be simple, but you must keep it updated. Compare it with what actually happens so you can spot issues early and make good decisions with plenty of notice.

Top tips for strong cash flow management:

• Set clear payment terms before work begins.
• Invoice customers as soon as you finish the work.
• Follow up overdue invoices early and professionally.
• Check supplier terms before you commit to a big job.
• Build a cash buffer for unexpected costs.
• Talk to your accountant before making major spending decisions.

Build capacity now so you're ready later

A business needs enough capacity to deliver good work when opportunities arrive. Capacity includes your time, your people, your systems, your equipment and your suppliers.

Think about what could hold your business back over the next six to 12 months. Are there any potential bottlenecks or gaps? You might not have time to respond to new enquiries, or you might be the only person who knows how to do a key task. Before you rush to hire, it’s prudent to see if you can improve your internal systems, processes and technology to handle scale.

See our articles for more information on lifting efficiency.

Boost productivity without growing your team

Transformation through process

Finding balance before burnout

Plan your people needs without rushing

Hiring may be part of your plans, but you don't need to employ someone before demand is reliable. Start by identifying the work that needs doing and the result you want from the role.

Consider whether the need could be met by improving a process, adjusting workloads, using a contractor, or building skills in your current team instead. If you do decide to hire, plan for the full cost, including wages, leave, KiwiSaver, ACC, equipment, training and your own time managing the role.

Test new opportunities before you commit fully

You don't need to make every growth decision at once. Where you can, test an idea before you make a big investment.

For example, if you want to offer a new service, ask existing customers whether they'd use it. If you need more support, trial a contractor before you create a permanent role.

And before you start your trial, decide how you'll measure success and when you’ll review the data so you can decide whether to continue, adjust or stop.

Take one practical step towards growth this week

While the economy is subdued, you’re free to focus on preparing for growth. Use this time to understand your numbers, focus on your most profitable work, and strengthen the systems that support you.

A Business Mentor can help you step back from day-to-day pressure, spot practical priorities, and build a growth plan that fits your business.