When a business starts out, or is very small, it’s possible to run reasonably well without much planning; dealing with each new piece of work or challenge as it arrives and simply getting by.

That is because the business only has short term goals.

However, when you want to expand, you have to systemise or risk ‘growing broke’ because haphazard processes simply aren’t robust enough to cope with additional activity, and the growth will only serve to amplify all of the problems or gaps in the existing model.

This premature scaling can be the worst possible thing, it is best described as ‘growing broke’ where either the business drives the growth, or the growth drives the business.  Both might sound okay, but the latter can be very dangerous and unstable.

If your business is always bespoke, always requires you to be involved, and is never systemised, then you don’t have a business, you have a job.

This week I want to share my 6 ways to help you avoid Growing Broke:

(1) Set a clear path and end goal:it’s vital to set up your strategy and have it in place before you start to grow. Too many make the mistake of starting a business without considering how they’ll expand or ultimately exit.

(2) Systemise your processes:you must work out exactly what makes your business work and document this so that everything and everyone understands their role (and the goal), and you have systems and processes in place that support the business so it can run without you.

(3) Set and monitor alerts and alarms that let you know if what you’re doing is getting you closer to your end game and alerts you to potential problems before they happen.

(4) Learn from your mistakes – a growing business is an evolving business; if you want to scale up and exit then you need to be dedicated to continuous improvement. Getting stuck in a “we’ve always done it this way” mind-set is a sure way to block growth and limit learning potential.

(5) Create the right environment, give the tools, get out of the way! Entrepreneurs are amazing business starters, idea generators and motivators but for many scaling is boring at best and impossible at worst.  If you’re a ‘big picture’ person then the details, fine tuning and systemisation of a scale up can lead to frustration. Knowing when to get help to reach the next stage is key.

(6) Develop a financial strategy: this sounds grander than it is, but there are just three key areas to focus on:

• How quickly does £1 you spend in your business come back in?
• How much of that £1 is actually the businesses, and how much is it other people’s money e.g. HMRC, staff etc.
• What working capital do you need to grow your business, and how will this be funded?

My final word this week…one of the biggest areas entrepreneurs struggle with is that of systems and processes. It’s neither fun nor shiny and can be painstakingly laborious.  BUT unless you start creating systems now, you will remain stagnant at best.

We worked with business owners Glenn Ackroyd and David Laycock who had an idea around seven years ago which turned into a small business in Yorkshire called EweMove. In September 2016, MartinCo plc, one of the UK’s largest property franchise groups, acquired EweMove for £15,000,000.

We did a mini interview with Glenn post-sale and he shared:

“Anyone who wants to achieve multi-millionaire status must go for a Scaled system and a business that can be sold. That’s what you helped us achieve Martin, so, thank you very much.”

BW,

Martin

Martin Norbury

Investor | Business Mentor at Advocate | Author of I don’t work Fridays

Image by mohamed Hassan from Pixabay