Planning for Profitable Growth

Having an effective growth plan for your business will ensure you deliver increased profits in addition to revenue growth.

Planning growth is a challenge as you can’t predict how quickly or slowly your marketing and sales strategy will pay off. However, you can plan how to grow your business in the most profitable way ensuring you have the right funding and resources to support that growth.

How profitable are you?

Before implementing your marketing strategy look at all the products and services that you offer and ensure you know how profitable each one of them is. You want to focus your growth strategy on the most profitable of your offering. Understanding your product/service mix from a profitability point of view will also help you once your growth strategy starts to pay off. If you find that the lower profit products and services are selling more you will know immediately the impact this will have on your profit and look to address it.

Who are you selling to?

Looking at your existing client base will help you to understand the right type of client for you in terms of sector and size. You can then determine if growth will come from existing clients or new clients which will have an impact both on your acquisition costs and the time taken to convert in to sales.

Factors to consider when looking at your targets are

Existing Clients

• Admin Burden- How demanding are they and do they pay promptly
• Are they in a growth sector – can your services grow with them
• Will they be open to other products you offer

New Clients

• Are they in a sector you already work in
• What are the marketing costs associated with accessing new clients
• What are the internal costs of on-boarding a new client

How will you service the growth?

Consider what resource you will require to service the growth and what the lead time is in recruiting from the point of going to market through to completion of their notice period. Knowing the trigger points well in advance for recruitment will help you work back to when you need to start any recruitment processes.

If you are a product based business give consideration to stock ordering terms, new supplier arrangements and physical space to hold any stock.

The key is in ensuring that when the growth takes off you can service it well and that you don’t lose the work having invested time and money in securing it. You also want to ensure you are still able to service existing clients preventing any leakage which then neutralises any steps you are making in terms of growth.

How will you fund it?

Growth is a cash hungry animal and you will need cash to fund the following: –

In addition to the initial outlay to support your growth strategy in the early stages you will need additional funding to support the costs you require to service the additional work before you receive payment from your clients.

It’s important to forecast this effectively to ensure you have the right funding in place to support your growth strategy and relieve working capital pressures.

Growth Planning

In summary in order to ensure revenue growth equates to profit growth and a healthy cash balance consider the four key elements.

Helen Fleet works as an outsourced Finance Director for companies striving for growth in both turnover and profits. Contact Helen if you wish to discuss more at helen@helenfleet.co.uk or 07960 564203.

Related Articles:

Planning recruitment to service growth

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