Growth planning and growth steering for small and medium-sized enterprises

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I've spent the last 5 years growing a small business from the ground up.

My husband and I run a manufacturing facility together, and last year we secured our first OEM customer, made plans to triple the size of our facility, and doubled our employee base. We're still small, but we're growing fast.

Over the past five years, we've faced many challenges, implemented many strategies to address them, and achieved success in some areas. As we prepare to ramp up later this year (I believe starting in Q4 at the latest), I've outlined some recommendations to help organizations of all sizes grow.

Stay on top of your sales forecasts

It all starts with sales forecasting. Most businesses want to operate within a budget and make a profit. Profit comes from controlling costs (my second choice) and increasing sales (my first choice).

I tell my clients that money solves a lot of problems and gives you more options. The question is, how much money do you need?

Even if you're a startup with zero revenue, someone needs to do annual revenue projections. If you have revenue projections for 2024, that's a good thing. If you don't already have one, now is the time to do it, since we're more than halfway through the year.

I create my forecasts from the bottom up. I look at my current and potential customers for the year, and the current and potential products I plan to sell, and determine the projected revenue for each. That boils down to a number that either fits or doesn't fit into my expense budget. From there, I can adjust expenses or determine other revenue opportunities, if possible.

work activities

Many small businesses don't have a dedicated sales person. It's usually the owner or someone who handles sales but also juggles other responsibilities. This creates challenges as sales activities take priority over prospecting and cold calling. Months can go by without the right amount of activity.

I create action plans for our business (and my clients) and track tasks on a calendar to ensure everything that needs to be done is completed. This means I have an accountability process where I meet with my head of sales, who is the lifeblood of the company.

I manage all sales and marketing activities for the company and am responsible for reporting my activities and sales numbers in weekly meetings with my managers.

Tracking your activity also gives you metrics to analyze if your revenue is not keeping up with your goals, if you are not tracking it is either not enough activity or not the right activity, and most likely not enough activity.

price

Pricing can be difficult for a variety of reasons (fluctuating material prices, changing labor costs, margin pressures), so management must conduct ongoing financial analysis, which includes factors such as burden rates, efficiency rates, margin analysis, and production times.

As a new business, you may go through several pricing iterations before determining a profitable price for your product or service. Leverage your sales team to communicate price increases to customers and justify their value. Initially, your price will be set based on your costs and desired profit margins. Once a project is complete, it's important to analyze the job from a profitability perspective and determine if any adjustments are needed going forward.

process

As a business grows, owners need to add processes for effective communication and efficiency.

When your business is still in its early stages, communication is easy: you have a minimal staff, everyone works together all day every day, and work is handled as soon as it comes in. As your business gains more customers, the work becomes more complex, and you add more staff, you need to keep track of workflow and make sure nothing falls through the cracks.

There's a fine line between adding process and maintaining the agility benefits of a small business. In my experience, key processes include regular staff meetings (with short, efficient reports), tracking quotes from RFQ to won or lost, job scheduling, and streamlined customer communications.

Staffing

When businesses face a problem, it is often a staffing issue. As revenue increases, businesses inevitably become less efficient. When it comes to delaying adding processes and procedures to maintain efficiency, businesses often solve the problem by hiring more people for the work. From a cost, efficiency, and management time perspective, this can be a mistake.

It's wise to track your total headcount costs and revenue per headcount. You should measure these two metrics against industry standards to ensure that your existing staff is doing enough work before you add more. Without a plan, salary increases can quickly outpace revenue increases.

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