What You Should Know About Planning For Company Growth

What You Should Know About Planning For Company Growth

15 Jun 2022


By Kieran Perry - Business Advisor & Sales Expert

Every year hundreds of businesses reach the point of no return. If you check the record you'll find that in retailing From 20 to 25 percent never last past the first year. An additional 19 percent close before the end of the second year.

Ten percent more go out of business during their third year.

Less than 20 percent are still in business after the tenth year.

The life expectancy of small manufacturing firms or wholesalers is some what longer. Perhaps a fourth of them last for 10 years. Why do so many fail? There are any number of reasons, including poor financial management, internal problems, selling difficulties, or inferior products. But there is at least one common thread running through all these reasons: lack of proper planning.

 

Growth Stopper No. 1:

Delaying Organizational Changes Too Long

As a company grows, it changes. To keep pace with the change, the organization must change too. Otherwise growth stops.

The classic pattern is the owner-manager who starts a small business. He causes it to grow by his ability and drive. As it grows, he hires assistants. For a while the business continues to grow. Then it levels off. Try as he will, the owner cannot get it to grow further, no matter how hard he works personally. Why?

He has delayed revising his form of organization too long.

 

Planning Is Not Projecting

The one thing planning most certainly is not is extrapolation of the present into the future.

An executive can ill afford to plan on this precarious basis. He cannot expect to find the same economy, the same suppliers, the same customers, and the same competitors tomorrow that he has today.

He cannot assume that the activities which meet today's needs will meet tomorrow's needs too. Yet it is apparently a very human trait, shared by economists, salesmen, and most businessmen (who must think about the future), to assume that the future will resemble the present.

 

This is mere projection, of course. Anyone can continue a curve on a chart to infinity. The skill comes in predicting what sources are likely to change its shape. This is planning.

 

Planning for the future

  1. Planning is the process by which profitable growth is sought and attained in a changing and uncertain world, and

 

  1. It is one of management's prime responsibilities, since a company either grows or declines; there is no in between position we come to the concrete problem of putting the planning process "into the works." How does one go about this?

 

There are four major steps in planning for growth or expansion:

 

  1. Gathering of all pertinent statistics and data.

 

  1. Close analysis of these facts and figures.

 

  1. Setting your objectives as to extent, size, type, cost, and estimated return.

 

  1. Step-by-step planning of the overall operation; putting it into the works. The first step in planning is to get acquainted with all the facts affecting your company. This is admittedly a big order, but one that must be painstakingly pursued if your planning is to be adequate. Nearly every management has a vast store of information about itself, its markets, the current state of the economy both at home and abroad, wherever it may have interests. Any information you do not have is generally obtainable from various sources.

 

 

How to Grow

Growth of a business can take two forms: an increase in the sale of its present product lines and/or entry into new fields, whether related to present activities of the company or not.

In setting a company's course for growth over a several-year period, it is a rare enterprise indeed that can assume it will be serving exactly the same markets with the same type of products at the end of that period.

Planning must therefore try to decide what the changes in the current market picture will mean to its present sales and how the company should react to the probable changes. As technology invades more and more of industry, the brutal fact must be faced that any sales product is likely to be superseded and become obsolete.

A business enterprise exists to serve customer needs. That enterprise which serves them best will always be the profitable one.

 

My name is Kieran Perry, I am an independent business advisor, sales expert and mentor. View my main website

I provide business advice, business coaching, management consultancy, mentoring and sales training to start ups, entrepreneurs, business owners and directors across the UK.