The old joke is that the best way to make a small fortune in the (fill in the blank) business is to start with a large one. Many of us have heard variations. The joke has been out there for a long time because of its unfortunate truth: Too many entrepreneurs start out with a great idea and a high level of expertise, and think that’s enough to carry the day. But growth doesn’t happen in a vacuum.
Business growth planning often takes a back seat to vigorous sales efforts, bootstrap financing, or operational management by triage. It doesn’t have to. A business plan forecasting growth is easily woven into a startup’s fabric and provides not only a road map, but a coaching and accountability tool to the founders. A business plan includes what’s commonly called a SWOT analysis to ascertain a business’s Strengths, Weaknesses, Opportunities, and Threats.
- Strengths. What need does the business fill? What does it offer that competitors do not? What unique feature does it have no one else does? If it’s a food service business, for example, does it offer a product in demand? Does the store have a locational advantage? If it’s a digital marketing agency, does it have, say, a search engine optimization tool no one else has?
- Weaknesses. Every business has them. Is capitalization a problem–is there enough money to not only pay the bills, but the owners’ salaries, for example? Is there a supply chain problem?
- Opportunities. Often, temporary situations present opportunities an owner can take advantage of. Maybe a competitor has closed. Maybe a new mega-business such as a chip manufacturer has come to town and needs a specialty product currently not locally available.
- Threats. As with the others, these come in all shapes and sizes. Perhaps a potential customer base such as a school or hospital is closing or cutting back staff. Maybe a competitor offers a similar product that’s hard to differentiate.
“Luck is what happens when preparation meets opportunity,” said ancient Roman philosopher Seneca. A business plan quantifies the needs and challenges of any business into a useful document owners can use for business growth planning, business financing, and accountability for both themselves and their employees.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.
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Manny Skevofilax is a consultant and speaker that assists his clients with successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny helps businesses to enhance their financial results by using his experience in strategic planning, financial statement analysis, operations, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at firstname.lastname@example.org.