Many small business owners are surprised by success beyond their expectations, and are often not equipped to handle or sustain rapid growth. Joanne Pimlott takes us through the key issues to consider from start-up to growth.
Starting a business is a complex, difficult, and exciting process. Remaining in business is a different and equally challenging thing.
If we had to give labels to the key processes or tasks associated with business growth and success, what would they be? Growth is also change, so the issue is also one of understanding how to manage that change and development process.
We can look at business growth from several perspectives, particularly: strategic, organisational, and financial.
The Big Three
Strategic growth: small businesses risk not growing or not managing the growth properly through failing to value and allocate resources to sufficient, timely and appropriate market research. Your business may be growing as a result of offering a competitive advantage in the marketplace. How will this be sustained? Will you, for example, grow through competing on cost or by differentiating yourself? In what way are you best positioned to differentiate yourself from the competition: through the way you engage with your customers; marketing; or through the actual product or service? The best way to arrive at answers to these questions is through effective and timely market research.
Organisational growth: managing the growth process means allocating time to planning and working on the necessary changes to organisational structure, as well as processes. The entrepreneur accustomed to flying solo now probably needs to recruit, induct, train and develop new employees. Try delegating responsibilities and transferring some of the control from the manager to others, as well as to the organisational systems and processes.
Financial growth: the desired level of growth may require a greater investment in some elements of your business. Determining the most effective way to fund growth is often undertaken with the advice of financial advisers and should consider the overall plans and longer-term objectives of the business and its strategy to arrive at a financial plan encompassing these elements.
Developing Ideas
Additionally, innovation is a most effective growth strategy. All businesses need to meet their existing commitments through effective administration and management. However, if growth is a desirable objective there is also a need to pay attention to the role of leadership, vision, market research, and ideas creation and evaluation. Innovation is the key to growth as it means offering to provide new and improved products, services and processes to an ever-changing market, and it is not only about what you offer customers but also how it is offered. Ideas that may constitute opportunities to be innovative can come from motivated employees, as well as from observing or researching changes occurring in the marketplace. So, innovation means providing an ideas-rich internal environment, allocating time to take in market intelligence, and determining the best way to respond to what the marketplace wants or needs.
The key to growth lies in taking the time to step aside from day-to-day tasks to think about what you are doing, why, and where you are heading. Take the time to think strategically about growth, to create or gather new ideas, evaluate them and plan. And where appropriate, include your colleagues and business associates in this process, so you grow together.
*Joanne Pimlott is founder and first director of the Education Centre for Innovation and Commercialisation at the University of Adelaide. Contact her at (08) 8222 9220.
Growing Great Guns
They’ve just been awarded the 2005 Telstra NSW Small Business Award (50-100 employees), adding to a pile of industry and innovation awards, not to mention recognition as one of BRW’s 100 fastest growing businesses for four consecutive years.
Since starting out in 1988, with just six staff providing contract software services, InfoComp has evolved into a successful business employing almost 100 people, offering its own software solutions to the financial services sector.
After six years of providing contracting services, an opportunity arose to shift from working with mainframes to providing systems solutions in the personal computer space. So they began developing bespoke (customised) systems for clients.
During that time it was a goal for InfoComp to have its own products, says Robert De Dominicus, CEO of InfoComp. They were alert to opportunities and within five years started providing their own packaged systems. De Dominicus says it’s the development and growing sophistication of those products that has really driven the company’s growth. “For example, when we first released our product Composer, it was a 10th the size it is today. That gives you an idea of the constant growth in the size of the system.”
Although growth has been fast, it has also been controlled, De Dominicus explains, especially in terms of cashflow. Having a business plan, forward thinking for the next three years or so and re-evaluating that plan every year, is also pivotal to InfoComp’s growth strategy.
While working with four or five clients at a time might sound like small fry to most, De Dominicus explains that for their type of business it’s actually a lot of work. “We essentially provide back-office solutions that have a 10- to 15-year lifecycle, and so it’s not like we sell one of these every week. It’s very much a long-term investment, a long-term need, a long sales cycle, because they’re quite complex. As a result, though, we have very long relationships with our clients and very long contracts.”
Targeting a niche is also key. “We don’t try to be a solution for everyone; we’re really only a solution for the type of client needing systems that have very large scale, capable and sophisticated configuration requirements.”
However, the company did experience a major setback in 2001. “Because our clients were asset and investment managers, they were affected by their markets going negative and they didn’t have the same in-flows. This slowed things down quite considerably for us. But things have improved.”
So much so that InfoComp has moved into the international market in the last two years, particularly to the UK, where they now have an office. “That’s proving a very good pipeline of business,” says De Dominicus.
Not content with its success to date, InfoComp is full steam ahead to bigger and better things. De Dominicus says going public is something they always keep their eye on, to decide when would be the right time. But in the meantime, “The plan right now is to expand the overseas markets and our product offering, so it’s not just an Australian or New Zealand solution but one we can adapt into the UK, Europe, and Asia, and perhaps beyond five years, the US.”
—Rebecca Spicer
