In the UK there are 5.2 million SMEs (small and medium-sized enterprises)1 that all differ in terms of industry and culture. Yet arguably one thing links them together: the various steps and milestones that define their business lifecycle.
Several business models have been developed that describe and analyse the stages of business growth, as there is a notable journey all successful businesses go through. Even though each SME’s journey is different, at certain points businesses require similar support and guidance to progress and grow. Below we’ve identified notable transitions as well as providing a top tip per stage to help move your business onto the next level:
Existence: Taking your first step as an entrepreneur
Once you’ve had that initial idea and developed it into a business – making it come to life and existing in the market is the primary stage of the cycle. The launch is the first major milestone entrepreneurs need to successfully navigate, and it can’t be stressed enough how fundamental planning and market research are in knowing your target audience and market through-and-through.
TIP: Smaller businesses often face challenges surrounding cash flow in the early stages, which is why initial sales are so critical. Thorough planning prior to a launch can also help avoid any cash flow issues and give you solid operating control, so strategically plan everything from budgeting to stock levels.
Survival: claiming your market
Reaching this stage demonstrates that your business works as an entity and can generate profit. Now it’s time to build relations with new and existing customers and carve out a deeper market share. Social media provides SMEs and micro businesses with an ideal platform that does not require a six figure marketing budget. Boda Skins Ltd, a Manchester-based manufacturer and designer of handmade leather jackets discovered first-hand how utilising social media can catapult business growth. Nathan Alexander, CEO and Founder of Boda Skins Ltd explains: “I began trying to sell our jackets to niche clothing boutiques in Manchester but soon recognised the greater scope of e-commerce in opening up a worldwide audience. Making the decision to be an online brand was the defining moment in our history and since launching in late 2012, sales have doubled year-on-year.”
TIP: Whether an online or high street business, it’s important to prepare ahead to help successfully manage supply and demand. Having demand from customers near and far is promising, but if you cannot get products to them, and in a timely and cost effective manner, you run the risk of damaging relations. To avoid this, speak to your logistics provider about accommodating your growing customer base, as they’ll be able to help you build a strong and healthy supply chain to ensure your products get from A to B without delay.
Success: staying ahead of the game
Once processes have been established and profits are steady, the business is officially a success. Now initial goals have been met this stage becomes a turning point in terms of growth or sustained success. Even though there is nothing wrong with the status quo, the marketplace is constantly evolving and so it’s wise to continue developing your business to stay ahead. To grow and develop further, put in place clear milestones such as sales targets and invest in training and development for your staff. Ensure you have an overall objective and timeframe you want to achieve that in and then implement smaller targets to get you one step closer. Don’t lose sight of the overall plan but use easily digestible goals to make sure your business growth stays on track.
TIP: As well as the routine work and planning required to maintain a successful business, it’s important to have a clear focus on future growth and overarching aims and objectives. Flexibility and being able to quickly and effectively adapt to the evolving market is crucial. By utilising technology and ensuring your growing workforce is fully trained you’ll be able to respond quickly to growing demand and go where your customers are.
Growth: conquering international markets
Once your company has built itself a loyal customer base in its national market you need to consider looking further afield to ensure continued growth. 96% of British SMEs who export, export into Europe with France, Germany and Italy topping the list of European exporting destinations2. This is because European markets are seen as the least complicated to enter and because other businesses have experienced success there. For example, those in the UK’s fashion industry, particularly first time apparel exporters, would be wise to consider European markets as a first step – given the current Free Trade Agreement and short transit time. However, the US is also a key market to explore and, given the size of the market, next day delivery is invaluable.
TIP: Europe is a great place to start your export journey, as its close enough to home for you to visit potential markets for yourself. By getting out there to meet the locals, browse shop windows and meet distributors face-to-face, you’ll be able to scope out the competition to make an informed decision on where to explore next. Speak to your logistics provider to gain their insight into prospective countries too, as they can offer guidance on your product’s suitability to a particular market and offer practical advice based on local trends and behaviours. Focusing on one country for starters will ensure your domestic business is kept in order. There’s plenty of time to conquer the rest of the world!
These defined stages can help entrepreneurs identify where their business is in its lifecycle and what can be done to help progression. At any stage it’s important to continue to build and maintain relationships with customers, remain competitive by constantly innovating, and when necessary seek expert help to grow your business, especially when it comes to expanding overseas.
1 House of Commons Library, May 2015
2 FedEx UK Export Epicentres Report, April 2015