You may get tunnel vision when focusing on getting contracts for your company. But that shortsightedness can have negative implications. As you try to grow, you’ll need to account for and manage your growth so you can sustain operations. Otherwise, you’ll get the contracts you want without being able to fulfil them, and you could end up growing yourself out of business.
Here are some strategies to help you expand your business without experiencing significant growing pains:
1) Start with a business plan
Planning for your growth and outlining how your business will manage it can make all the difference. A traditional business plan can help you understand whether you’ll need to fulfil one or multiple contracts, what you could gain from them, and how many you can afford to take on at once.
A strong business plan can also help you get a bank loan; which you may need in order to fulfil your contracts.
2) Get the funding you ned
Growing yourself out of business is commonly caused by not having enough capital to get the equipment, employees, or materials you need.
Your business plan can help determine how much outside funding you’ll need and can help show lenders that you’re prepared. You can also leverage a strong business credit profile to help get a loan (your business credit profile helps convey to lenders your ability to repay a loan).
It might not be easy to get the funding you need in today’s lending environment, so you’ll want to plan far in advance and work with multiple funding sources, both alternative and traditional, to help increase your chances of getting a loan.
3) Minimise your risks
After you’ve planned for your growth and started to get the funding you’ll need, the next step is considering the risks that come with growth and working with other companies. Just as the company you’re contracting with will analyse your business for risks – such as late payments, bankruptcy, or suits and liens – you should analyse the risks that may face your own business.
To put a stopper on growing yourself out of business, think of these questions:
• If you need to add companies to your supply chain, consider what would happen to your business if that company doesn’t deliver on time. What would that mean for your contract?
• If you need to lease equipment, consider what would happen if the leasing company ceased operations. How would you continue to fulfill your contract?
You can help mitigate risks like these by analysing the business credit scores and ratings of the companies you want to work with. Being able to anticipate issues like the above can help you make smarter decisions and grow your business safely.
If you have a plan, sufficient funding, and low risk, you’re in a good position to grow your business. Without these key ingredients though, you may end up doing more harm to your business than good. Keep these strategies in mind when bidding on contracts so you don’t accidentally grow yourself out of business.
Amber Colley is vice president of emerging businesses at Dun & Bradstreet