For your business to survive, you want it to grow sustainably. Understanding sustainable business growth can be confusing at first, which is why we’ve made this simple guide to it.
What is sustainable business growth?
Sustainable business growth is where your business can expand at a rate that will allow it to continue without changes. What this means specifically, is that:
- Your business can guarantee a consistent and high level of quality to every client
- No employee is overworked
- Your business has a positive working capital
Current growth rate analysis
To implement sustainable business growth you first need to analyse your business’s current rate of growth. You’ll want to list all the recent developments of your business, such as:
- Any recent clients
- Any new employees
- The rate of sales
- The rate of profit
By comparing the above variables, you should be able to map out how and where your business is growing. For instance, you might find that you’ve taken on many clients recently, but had the same amount of work. This could lead to what looks like growth, resulting in your profit staying the same. An analysis like this allows you to see if your business is expanding in the way you want it to.
What are your current growth limits?
Once you have analysed whether/how your business is currently growing, it’s time to identify whether it is sustainable or not.
Do you need more employees?
It’s important when trying to manage a business to work smarter, not harder. It may seem obvious that if your business is taking on more work, to hire more employees. However, there may be an easier solution. Take a step back and look at your business as a whole. This will allow you to spot any redundancies in your current way of working. Are your employee’s skills being used the most effectively? Are there any tasks that can be automated? Rearrange the way your business works, to remove any unnecessary or inefficient tasks.
Can you keep up with your current clients?
As your clientele begins to get bigger, it’s important to reflect on your current clients. After all, they’re what allowed you to get to this point. Are you able to continue providing the same level of quality that drew them to you in the first place? If not, you might want to reevaluate your client base, to focus on your older ones. Reliability can result in more work from your clients. This makes it important to decide how dedicated you can be to each client.
Do you have enough working capital?
If you do need to make large financial investments for your business, you need to look at your working capital. This is the money used to fund things that won’t return until the work is complete. There are 3 main types of expenses a freelancer should be aware of. These expenses cover things like:
- Payroll
- Tools/equipment hiring
- Fuel/vehicle costs
To calculate how much working capital you have, you take away your current liabilities from your current assets. Having a positive working capital allows you to safely invest in your business’s future. This ensures that you can afford to take on any new costs that come with expanding your business.
Ways to support business growth
If your business doesn’t have the working capital to support growth, you need to look at increasing its available funds. Finding new investors can provide a boost to your business, and add a layer of security for any planned growth. After all, the more your business benefits from an investor, the more the investor will get in return.