How to grow your business

Even in tough times, there are opportunities for your company to grow its business. For example, you could:

• sell more to existing customers
• find new markets
• offer new products and services

However, before you draw up your strategy, you should first research the marketplace to find out:

• What is the level of demand for the products or services you offer?
• What makes your competitors successful?
• What drives your customers to buy from you rather than the competition, and if and how are their needs are changing?
• What about your suppliers? What level of quality do they give you? What credit terms do they offer? And what supply guarantees can they provide?
• How is the landscape that your business operates in changing? For example, what are the emerging trends and latest technologies? How will market conditions affect things, if at all?

Do a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)

This is a useful tool to analyse your business and identify what gives you an advantage in the marketplace and how you could improve. It could also give you insights into strategies to achieve your goals.

This type of evaluation is not just about products and services. Think about strengths, weaknesses, opportunities and threats across all your business, including:

• staffing
• new markets
• regulatory changes
• financial controls
• support mechanisms
• skills
• systems

You may then unearth an insight into a marketplace advantage or area for improvement that could help you formulate your growth plan.

A gap analysis is another useful process. This involves looking at where your business is now, where it wants to be and how to bridge these two states.

Get an understanding of your business’s sustainable growth rate

Work out the maximum sales growth you can reach without compromising your cash flow or requiring extra finance. By aligning growth strategy with growth capacity, you can identify areas of overreach.

Remember, increased sales don’t always mean increased profits. You must consider extra costs such as a higher wage bill, or a need to pay upfront for raw materials.

If sales are growing but profits are falling, you may want to reconsider your pricing strategy – especially if you used heavy discounting to capture market share. By working in a profit percentage for each sale, you can protect your margins.

Investing in processes and systems that can be scaled or automated as your business grows can lead to efficiencies later on. Accounting, cash collection and time-management processes in particular must be rigorous.

Write a business plan for growth

Creating a business plan and reviewing it regularly is vital to understanding how your business is operating. It can provide the backbone of your growth and help you to:

• objectively assess where your business is going
• produce a clear action plan with a strong sense of direction including deadlines and desired outcomes
• set out the upfront costs and investment required to achieve your goals
• spot any issues with cash flow, capital requirements, staffing or supply chain
• identify where investment in sustainability initiatives could reduce costs
• provide a clear action plan with directions, desired outcomes, deadlines and measurement criteria
• persuade financial backers that you understand your business and can meet customer needs

You should update your plan according to your business’s changing needs. And regularly check figures against performance to keep growth on track.

See our more detailed guide to writing a business plan

Write a marketing plan for growth

This should complement your business plan and show how you will achieve and maintain growth, whether that’s by winning more business from current customers and/or attracting new ones.

Start with your customers:

• Who they are, where they are and how they buy from you
• What they want from your product/service
• Why they choose you – this is your unique selling point

Next consider:

• Which distribution channels work best for your customers and your business - direct, online or through third parties?
• How much, when and at what price will customers buy? Should you focus on a few high-paying prospects or a broader market with lower budgets? This will help you optimise your pricing.
• Should you encourage repeat business through incentives – or attract new customers?
• Which promotional channels and techniques work best to target your customers? This will help to determine your marketing channels and budget.

Assess your resources and capacity

Your marketing plan will show the quantities of goods and services you need to produce in order to reach your targets. For some businesses, scaling up requires investment in physical assets such as specific products or raw materials. You should regularly review your projected needs in the short, medium and long term and plan your investment accordingly.

Can your existing suppliers deliver the right quality, credit terms and guarantees? Can they scale up to meet your production and delivery demands? Can they support your sustainability initiatives? Tell your suppliers about your plans so they’re prepared for the increased demand.

If demand is irregular or seasonal, you should track the peaks and troughs over a period of time to identify any patterns. There may be new opportunities when you are under capacity, or you could take on extra resource for busy periods.

Your financial forecast

If your business grows quickly, cash may leave faster as costs rise.

Cash flow is the key to managing growth, so you should work out the maximum amount of sales growth you can reach without running out.

That way, you can ground your growth strategy in what’s genuinely achievable.

Have you saved any profits to invest? If not, you may have to borrow to fund new equipment and premises, which will increase costs.

Consider the impact of taking on debt on your finances and cash flow over both the short and long term. Remember also that lenders will want to see clear expansion plans, achievable targets and the ability to pay them back.

Embrace Net Zero

The UK government has committed to achieving Net Zero by 2050. However, this is not just a set of restrictions. By embracing environmental sustainability, you can prepare for the changes and opportunities ahead.

For example, investing in electric vehicles could help your business avoid clean air zone charges, and implementing a recycling policy could reduce the cost of managing waste. Making greener business decisions now could reduce the costs of meeting requirements in the longer term.

You can find out more about Net Zero and how Lloyds Bank can support you on our Sustainability Hub.

It’s now time to put everything together. You can develop a business model by setting out all of your planned incomes and costs, based on your strategy, business plan and marketing plan. It will also:

• identify shortfalls in cash flow and funding for your growth plans
• detail profit or loss for the months and years ahead
• provide a balance sheet

Once completed, this new model will provide the basis for running your business. You will know what to do, how to do it and what results you’re seeking.

You should communicate it to all business areas, so each employee understands the big picture. Remember also to regularly review your performance against your plans to keep on track or identify issues.

Once your business begins to grow you may need more staff, facilities and equipment to cope with demand. The key is to enable growth without burdening the company with space you can’t use.

You have three options:

• Extend your existing premises
• Add an additional site
• Relocate somewhere bigger

If you’re moving, you can buy either freehold or leasehold. Leasehold offers greater flexibility but could increase overall costs.

You should also consider what facilities and amenities you need.

• Will you require a reception area, parking, meeting rooms or warehouse space?
• If you’re looking at a business park or serviced offices, what do they offer?
• What about broadband, energy costs or staff catering facilities?

You may also want to assess if new premises could help reduce your business’s carbon emissions using our Green Buildings Tool.

Location matters too, whether for staff, customers or suppliers.

• Are there good transport links?
• What about local competition – will it provide challenges or could you attract more customers through close proximity to other respected brands?

Building your team

Owners of small businesses can get involved in every decision, but with growth comes the need to delegate. This may require new management structures or changes of roles. As you continue to scale, you may need to adjust how you communicate with staff so they feel involved, supported and listened to.

Spending time thinking about and documenting your organisation’s culture and core values gives you a benchmark to assess how potential employees will fit in and embed the culture you want to keep.

As you start to grow, you may need specialist expertise in certain areas. Unless you need full-time, long-term help, outsourcing could be more practical and cost-effective.

Typical business functions that can be outsourced more easily are:

• accounts and finance
• legal
• marketing and advertising
• technical support
• recruitment

Outsourcing frees up your staff to focus on key objectives, but it could mean giving up a degree of control. You should monitor outsourced performance by:

• setting out clear objectives and deadlines
• obtaining written agreements and quotes whenever possible
• appointing a key contact between outsourced functions and the business

Regularly review the arrangement so it continues to meet your needs and the standards you expect.

Manage your supply chain

Remember to take suppliers with you on your growth journey. Share your plans with them to check that they can meet increased demand or consider bringing additional suppliers on board. With careful planning, your supply chain can keep up with your growth and you can prevent the reputational damage caused by unfulfilled orders.

Don’t forget your customers

Customer satisfaction and retention can be a casualty of fast growth. Winning new business is great, but retaining old customers is vital to long-term business health. Listen to their feedback and act on it so you can improve your service to old and new customers.