Planning for Growth
Visualizing the Next Two Growth Stages Keeps You Ahead of the Curve
Businesses grow in phases. By visualizing your company's next two stages of growth, you'll know where it's headed and how to prepare.
Most businesses don’t grow smoothly; they grow in a series of fits and starts.
Beginning with a small staff and limited workspace, the company’s sales grow until the staff and space become overburdened. To handle the growing workload, you acquire more space and hire new people. At first, the new resources are underused; you have more capacity than business.
As sales continue to grow, you eventually reach 100% utilization of resources. Before long, though, your resources start being stretched once more, and then it’s time to grow again.
It’s easy to be overwhelmed trying to plan for the countless incremental changes that constantly occur along the way to each new level. Recognizing that growth is not linear, however, but more like a series of plateaus, is exactly the frame of reference you need to effectively plan for expansion.
To make growth planning manageable, focus on what the next plateau looks like. Imagine that ideal state in which your future business volume perfectly matches your resources. How many people do you have? What are their jobs? How is your company organized? How much space and equipment is needed? What does cash flow look like?
To answer these questions, you can start by creating the perfect organization chart for your next business level. From there you can identify how much business volume you can handle, and what space and equipment you’ll need.
You should also put together a projected profit & loss statement to find out what gross margins, expenses, and net profits to expect under that structure. This will help you plan for your capital needs, as well as avoid creating a fiction that would never work financially.
This planning process is very likely to be iterative. You’ll start with one version, and then discover it’s not going to work the way you thought, so you’ll revise it. That’s the beauty of planning. By thinking it through ahead of time, you can pre-solve many problems before you face them.
If you picture this perfect future state of your business and write it all down in a description of what you’ll have and how it will work, you’ve created a snapshot of where your business is going.
With this picture of your future clearly in mind, making the little decisions along the way is much easier. You’re working with a plan.
To really finesse your growth planning effort, however, picture the plateau after next. When you look further ahead and see how the company will morph yet again, you may figure out how to better structure the previous plateau to better support the following phase of expansion.
