By Rieva Lesonsky
Remember the Great Recession, when small business owners were happy just to hang on? Those days are over. In the recent American Express OPEN Small Business Growth Pulse, a whopping 72 percent of entrepreneurs surveyed say business growth is a priority for them—and almost half (48 percent) say their companies have grown significantly since launch.
Here’s a closer look at what the study found about the growth plans of entrepreneurs.
Approaches to growth vary. While the majority of entrepreneurs polled (63 percent) report taking a slow and steady approach to business growth, 25 percent prefer to be aggressive about it. Whether they’re cautious or daring, 49 percent of entrepreneurs polled admit that coming up with new ideas for business growth “keeps them up at night.”
The Takeaway: There’s no one “right” way to grow your business. You have to choose an approach you’re comfortable with based on your temperament, market opportunities and available capital. Nor is growth something that happens once; it’s an ongoing process that requires constant reinvention.
Make a plan or wing it? Four out of 10 entrepreneurs in the survey say that their past business growth was been planned; just 27 percent say their companies grew spontaneously or organically. However, of the entrepreneurs who are prioritizing growth currently, a whopping 65 percent have created a formal plan for growing their businesses.
The Takeaway: As the late Yogi Berra said, “If you don’t know where you’re going, you’ll probably end up someplace else.” Creating a plan for business growth greatly increases your chances of success by helping keep you on track despite all the demands of running your business day to day.
Where does growth come from? Small business owners are about evenly split as to the most important aspect of business growth. Twenty-six percent say increasing customers matters most to growth, while 24 percent say increasing revenue is most important and 23 percent believe increasing profits is key. To achieve these goals, one-third say their biggest growth opportunity is expanding into new marketplaces, while one-third say diversifying into new products and services will give them the best chance for success.
The Takeaway: When we think of growing our businesses, most of us probably think of getting more customers. But that’s not the only way to go about it. In fact, it’s quite common for businesses to grow their customer base and actually see their profits decline. This occurs when you don’t take the time to do financial planning and projections that take into account all the added expenses that can come with growth, such as adding staff or expanding your location. You can also grow revenues and profits without ever adding customers; just try tactics such as boosting your prices and cutting your operating costs.
Small business owners don’t grow it alone. More than four in 10 (41 percent) of entrepreneurs surveyed say networking has the biggest effect on their growth — more than marketing or advertising does. About half (49 percent) say networking with other small business owners, as well as with business experts, is a critical step on the path to business growth.
The Takeaway: Getting ideas, inspiration and referrals from your contacts is a smart way to approach business growth. Do you have a mentor or a board of advisors? If not, finding such experts is a savvy move: Their guidance can help smooth your path to business growth.