In the latest article from Business Link, the government’s network providing guidance for small and medium-sized enterprises, Helen Cracknell looks at the first steps to take when planning growth

Whether you are running at a loss, breaking even, or returning a healthy profit, there is always an opportunity to grow your electronics business. But expanding can be challenging and risky.

To give your business the stability and direction through growth, adopting the right strategy is essential. Timing is also critical and you must make sure that you have the capacity and resources to cope with the expansion whilst still fulfilling current customers’ requirements.

Business Link recommends the following steps when planning growth for your business.

Assess your business
Before doing anything else, take a health check of what shape your business is in now.  This will help you ensure that it is properly structured and resourced to make the growth strategy you choose viable. A burst of activity that has not been properly planned could seriously damage your business.

At the same time, ensure you look after your existing customer base – it’s their business that will help provide you with the vital cashflow to support growth.  For more help reviewing your business’ financial health, visit www.businesslink.gov.uk/healthcheck for guidance.

Financing your growth strategy
Any kind of growth will require investment, from new stock and recruiting people to investing in marketing activity or even taking on new premises.  To establish your capital requirements, think about some of the following areas.

• The amount of investment required to fund the venture
• When it will be needed and when it will be available
• The return on the investment

Remember to ensure that enough money is in the pot to keep the core business running. It is also a good idea to build in surplus too, as projects can often take longer to bear fruit than originally predicted.

Finding opportunities
One of the keys to business growth is identifying new opportunities.
Research will enable you to identify potential prospects. Basic market research is one option, and will help you understand what your customers need and look at any necessary changes to build a more flexible and responsive pharmacy business.

Local demographic information can also help inform your strategy. For example, if you are located in an area with a lot of manufacturers or assembly lines, your business’ offering should reflect this by dedicating targeted offers to those that require large orders. On the other hand, if your town or area has electronics enthusiasts then perhaps you could provide workshops for individuals who buy your products.

Achieving business growth
Growing your business organically is usually done in one of two ways – by either increasing market share, or by diversifying into new markets. Both of these approaches present different challenges and benefits, and the one you adapt should depend primarily on your business, its resources, the local market and opportunities you may have identified when planning and researching your options.
 
Increasing market share
Increasing your market share involves attracting new customers and sometimes tapping into a competitor’s customer base. To achieve this you must have a thorough understanding of both your customer base and of rival businesses.

Some of the factors you might want to consider when planning a drive to increase your market share include:

• Existing customers and beyond: Think about who your core customers are and other potential customer groups that you have not yet targetted
• Competitor audit: Look at what your competitors do and how well they do it. Think about whether you should be introducing any of the products or services that they have
• Unique selling point: Does your business have a point of difference or anything which makes it unique? If it doesn’t, then can you introduce something that will attract new customers and make existing ones more loyal?
• Losing customers?  Think about whether you have seen changes in your customer profile. Did your firm used to attract different types of customers and if so, what stopped them buying from you?
• Commuincate: Consider investing in marketing – local and trade advertising or even PR will help you raise awareness of your products and services

Diversification
Diversification can take several forms, including:

• New, related products or services to existing customers
• New markets for existing products
• New products for new markets

Because of limited resources, this approach can be more risky for small businesses. As you may be doing something new in a less familiar market, there is an element of uncertainty as to how successful the diversification activity will be.

Diversification requires more time, expertise and investment than simply increasing your market share, so think through some of the following areas:

• Market research: Look into whether there is an appetite for what you are thinking about introducing
• Development: Map out the process which will see you introduce the new service or product to your business – this could be in the form of a prototype or a test run
• Money: How much will diversification cost you, and how much can you expect back from it?
• Sales and marketing: Does your business have the capacity to promote and deliver the new product or service?

Generally speaking, diversifying with similar products or services and selling them to a familiar customer base is less risky than creating a product for a completely new market.

And finally
The areas above are just some of the first steps that you may think about before growing your business. Depending on the size of your business and the scale of your expansion, other areas such as staffing, training, premises and technology may become relevant.

When it comes to rolling out your expansion, use a timeline and targets to keep track of your short-term objectives and achieve the long-term goals. Remember, it’s important to grow at a pace that your business can cope with, both internally and for your customers.

For those customers who want to talk through their business issues with a local adviser, you can ring 0845 600 9 006 to find your nearest office. Alternatively, you can visit our national website, www.businesslink.gov.uk which contains useful information and practical help.