If you quickly polled your friends and family, you’d probably be surprised by how many of them have a business idea and would love to someday pursue the entrepreneurial route in life. Why haven’t more of them done it yet? The likely obstacles include fear of losing the consistency of the 9-to-5 life, lack of small business experience, and uncertainties on where to acquire business funding.
But you were different—you followed through on your great idea, showing moxie and determination. Make no mistake, starting your small business was a huge accomplishment.
Taking Your Business to the Next Level
Are you ready to make your small business a little larger? The first thing you’ll need is a plan. As the owner of a new business, you should be well acquainted with the virtues of business plans. You likely created a robust plan that helped take your idea from the drawing board to reality.
Now, you’ll need to employ that same strategy and focus for your business’s growth aspirations. Using your original business plan as the jump-off point, identify specific goals for the next 6–12 months. Possible focuses include:
- Selecting new business locations
- Expanding product or service lines
- Developing a broader customer base
- Bolstering your marketing strategy
- Purchasing new equipment
These decisions should be guided by due diligence. It doesn’t matter whether your business has been around for decades or only recently took down its “Grand Opening” banners, it’s essential for you to have a plan. And every effective plan is fueled by research.
“Before you even start growing your business, you need to do some research,” advises Forbes. “You need to know what your business is capable of doing with its money and other resources available. Assess your business. Look at all the analytics, stats, and accounting records that are available to you. Analyze how your business has done in the past. And when possible, make projections of how you think your business will do in the future, such as sales projections.”
Guided by your intel, you’ll be able to outline a plan. In its simplest form, this growth plan will answer basic questions such as:
- Why do I want my business to grow?
- How can I make that growth happen?
- What is my timeline?
- How much money will my efforts require?
- How will I fund my efforts?
Addressing these topics will guide you to the tactics needed to bring your goals to life. You’ll notice that the information you’re gathering is similar to what you used to formulate your initial business plan. In many ways, a growth plan is simply an evolution of the business plan you used to launch your business—it’s like a multistage rocket, where the initial plan gave you the propulsion needed to launch into the atmosphere. Now, that booster drops off and the next stage kicks in to guide you into a higher orbit.
“We often make the mistake of thinking of a business plan as a single document that you just put together when you’re first starting out and then set aside,” says a planning guide from The Balance Small Business. “Something to check off the to-do list and be done with. But in actuality, the business plan for any business will change over time as the business develops, and any particular business may have multiple business plans as its objectives change. In the growth phase, an updated business plan is useful for forecasting or raising additional capital for expansion.”
By viewing your plan as an organic tool that guides you through each phase of your business’s journey, you’ll be able to stay organized, motivated, and successful.
Funding Your Growth
The details in your plan will help you to narrow the search for ideal funding sources. For example, if your timeline is tight, you’ll need to look at financing with fast approvals. If your efforts come with a hefty price tag, you should focus on financing that is designed for larger purchases.
There’s typically a wide range of financing products available to small business owners. Let’s take a look at some of the most popular options used for growth.
Loans from the SBA offer enviable rates and terms thanks to the agency’s unique role in the process. Rather than directly providing you with the money, they connect you with a lender and then guarantee a portion of the loan. Due to the decreased risk, lenders will be more willing to work with you—and in some cases, they will actually compete for your business.
Popular financing products from the SBA include SBA 7(a) Loans, SBA Express Loans, and SBA 504 Loans. The dollar amounts on these loans start around $50,000 and top out at $5 million.
Term Loans: These loans are often preferred by small business owners for their versatility and borrower-friendly rates. You can use the money from a term loan for just about any growth strategy associated with your business.
The interest rates for term loans start at 6%, which is impressively low considering that they can provide you with as much as $2 million. Another benefit is the speed of these loans: while SBA loans might take 2–3 months to process and fund, you can get a term loan in as little as 2–3 days.
Short Term Loans: When you need fast cash to fuel your business growth, you should consider a short term loan. They’re similar to a standard term loan except they can fund in just 24 hours. To make this lightning-fast time frame possible, short term loans are designed to be leaner. The maximum amount is $500,000, and you’ll need to repay it in just 3–5 years.
Another factor to consider with expedited financing is the interest rates. Short term loan rates start at 8%, but you’ll often see them set substantially higher.
Equipment Financing: This type of loan is a great fit if your business strategies involve equipment. You can get up to $5 million with an equipment loan, and the money can be used for much more than just bulldozers or trucks: items like fridges, stoves, desks, tables, chairs, solar panels, and software all fall under the umbrella of “equipment.”
As with short term loans, you can often get the money within 24 hours of approval. The interest rates start as low as 7.5%, with repayment terms of 2–5 years.
Business Lines of Credit: There are times when you need a continual cash connection rather than a lump sum. A business line of credit delivers this, functioning much the same as your personal credit card. You can get approved for up to $500,000, then access the money any time you need to make a purchase. You repay what you spent (plus interest), and the total amount is reloaded.
The interest rate on a business line of credit usually starts at 8% and can reach as high as 24%. Be sure to do your due diligence so that you get the best rate available.
Merchant Cash Advances: With a merchant cash advance, you borrow against your business’s future earnings. The funds, ranging from $5,000 to $200,000, will reach your account in just a couple of business days. At that point, you’ll begin the repayment process by having a percentage of your daily credit card deposits withheld.
One of the biggest benefits of a merchant cash advance is their flexibility: you can use the money for just about anything business-related. But the price tag can be steep, with interest rates hitting as high as 18%.
Commercial Mortgages: These loans are engineered specifically for property-related expenses, ideal if your business growth plan involves getting out of a lease, purchasing a business location, building new structures, or expanding your current property.
A commercial mortgage is asset-based, meaning the loan amount and interest rate would be based partially on the property you’d be using as the collateral. These loan amounts typically range from $250,000–$5 million. The interest rates can be quite favorable, starting as low as 4.25%, and the loan’s terms are typically 20–25 years.
Business Acquisition Loans: If your growth plans include purchasing a franchise or existing business, this might be an excellent financing option. You can receive as much as $5 million with a business acquisition loan, with interest rates starting at 5.5%. The money won’t arrive as quickly as expedited financing, like a short term loan—plan on it taking up to a month to reach your account.
Lenders will pay close attention to your business plan when approving this type of loan. They’ll want to ensure you have the experience and revenue in order to make the acquisition successful.
Each of these financing products has strengths and weaknesses, so it’s essential for you to review all the options carefully before signing on the dotted line. When done right, you’ll be able to navigate the loan process with confidence.
Tactics for Your Business Growth
You likely already have some ideas for how to spur your business’s growth—other ideas will only come through research and analysis. Remember that the most successful plans incorporate numerous tactics working simultaneously rather than homing in on just one. It’s best to use a tiered approach.
“Growth strategies resemble a kind of ladder, where lower-level rungs present less risk but maybe less quick-growth impact,” says Inc. “The bottom line for small businesses, especially startups, is to focus on those strategies that are at the lowest rungs of the ladder and then gradually move your way up as needed. As you go about developing your growth strategy, you should first consider the lower rungs of what are known as Intensive Growth Strategies. Each new rung brings more opportunities for fast growth, but also more risk.”
Here is a quick look at some possible tactics that could help you to reach your goals:
- Build your email list: Your business will need to expand its leads in order to thrive. Start growing your email list today by offering a lead magnet, like an exclusive discount or free sample, to your customers. Continue to cultivate your email list with ongoing offers that make them feel valued.
- Pay attention to your reviews: A bad review posted by a good writer can quickly generate notoriety for your business. Always monitor what’s being said online about your business. Highlight the positive reviews to spur growth and respond quickly and fairly to any negative reviews to mitigate the damage and turn the bad press into a positive moment.
- Focus on your customer base: It’ll be necessary to chase new customers during the growth phase, but never forget the people who keep you in business. Keep your base engaged with special promotions and value-adds. When done right, you can actually see business growth tied directly to your existing base.
- Leverage social media: You should always communicate in the specific places where your customers are listening—and social media is a prime location. Use research to find the most impactful channels and then implement your findings to attract new customers and engage your base.
- Partner up: You can strengthen your position in the industry and connect with new customers by collaborating with a non-competing company. Look for ways to form a partnership that adds value to the customer bases from both businesses.
- Keep track of everything: Implementing your growth plan can take a lot of time and effort, but don’t forget to dedicate time to tracking its results. Data can become the fuel that drives most successful campaigns. For example, a simple tool such as Facebook’s Creative Compass allows you to identify effective ad headlines and imagery—so you can double down on your successes.
- Make your offerings more attractive: Perhaps it’s not enough to do a better job of telling people about your products or services—maybe the most growth would come from improving them. Evaluate your offerings and look for ways to innovate on your ongoing successes, which will help you to rise above the competition and attract more conversions.
- Get everyone on board: When you think about growth, much of your energy extends outside the walls of your business. But don’t underestimate how important it is to get your employees involved. Ask them for growth ideas, thank them for their contributions, and implement their best suggestions. When your team feels like they have a stake in the plan, they’ll work harder to carry it out.
Successfully Implementing Your Growth Strategies
Start with the low-hanging fruit. By choosing initiatives that don’t cost as much money and offer a bigger return, you can start building the momentum necessary to implement some of your more ambitious strategies. It’s ideal when multiple initiatives can coexist—just be careful not to overload yourself, which only dilutes your effectiveness.
Be sure to lean on your colleagues, partners, and mentors during this time. The stronger your network, the higher your chances for success.
“When you’re growing your business, you might become protective,” cautions Forbes. “You might want to do everything yourself to protect your business from outsiders and big changes. But, this protection could hurt your business. If you try to do everything yourself, you can become burnt out. And without outside input, you might not have the necessary creativity to grow your business. You have people you can rely on to help you get things done. Your employees can do many of the tasks in your business. You can hire independent contractors to help. You might also seek help from business experts and local business owners who already have experience with what you’re trying to do.”
As you enlist your supporters and focus on high-impact strategies, you’ll be able to generate sustainable growth. By tracking results and identifying your winning ideas, you can hone your efforts and get the biggest bang for your buck.
Most importantly, the data you compile through your tracking will ultimately create a playbook for future initiatives. Remember, your business plan should be an organic document that is continually updated and refined. Every win you experience today can lead to multiple wins in the future—producing the momentum needed to truly take your small business to the next level.