Taking your enterprise to the next level is an ambition for many business owners, but it is not a decision you should enter into lightly. Growth is something that requires careful planning, the right tactics and secure finance and logistics behind it. Taking the plunge too early could result in falling standards, disrupted operations and undesirable costs.
To ensure success, it is therefore vital to pick the right time to scale your business and move between the different stages of growth. But how do you know when that time has come?
Fortunately, there are some key indicators you can monitor to determine when your company is ready to take the next step in its lifecycle. By keeping track of these metrics, you can identify when your business is in a position to grow effectively without placing a strain on your existing financials and operations.
In this blog, we will detail the five most significant indicators of business growth that will tell you to seize the opportunity for expansion.
Demand
Demand is a significant indicator of growth for your business, as it tells you how many people want to use your products or services. The higher the demand, the more extensive a pool of potential customers you have, leading to increased sales.
If you are witnessing rising demand, it is usually a sign that you are doing well in your existing offering to the point that people are lining up to purchase from you. It could also mean that your promotional tactics, such as your marketing and sales channels, are performing well and creating a thirst for the business.
When monitoring demand, you should look at how many sales you are getting and if these are increasing over time. You should also consider any new audiences you may be able to target that you aren’t already, even if it means adding new products to your portfolio to address market gaps.
If your company is struggling to meet increased demand – such as experiencing delays in fulfilling orders or even having to refuse customers – it is a sign you need to scale up your operations. This means expanding your operations, recruiting new staff, acquiring additional premises or equipment, investing in new processes and increasing your supplies. All of these will amount to the next stage of your business growth.
Profit
Profit is closely linked to your demand and sales, but it is vital to track individually as it shows the income you receive once your outgoing costs have all been accounted for. If your business is seeing losses rather than profit, it is a sign that you should focus on stabilising rather than seeking expansion or that you need to invest further or faster to achieve the growth you need.
Profit is tied to your bottom-line growth and tells you if your sales are outpacing any increased costs required to meet rising demand. This will be significant when you are scaling up your company, as it illustrates whether the investment you are putting into operations are being mirrored in the sales you are making as a result.
Regularly review your accounts to determine what profit patterns are there. If you are seeing increased profit margins over time, it indicates your company is in a state of success. It also means that you have working capital available to fund the expansion of your business.
You should also compare your profit levels to those of your competitors, as this will benchmark your position in the market. If you see only positive signs, it could tell you that you are in the right place to grow.
Customer satisfaction
Customers are the foundation of any enterprise, so it makes sense that their satisfaction is an indicator of growth. Having a satisfied customer base demonstrates that your business is stable and that you are providing the right products and levels of service. It means that your existing offering is running efficiently, something which should always be the case ahead of scaling anything further.
Unlike profit and demand, customer satisfaction cannot be monitored in your bank accounts. Instead, track your review score, customer surveys, complaints, feedback and the number of repeat purchases you receive. This can all reflect how your customers feel about you.
Satisfied customers can equate to loyalty, helping you to establish a base of consumers who will return to you again and again to maintain sales. Furthermore, these can become brand ambassadors: people who recommend your enterprise to their friends and families. This can increase word of mouth marketing, which can in turn increase demand and convert new leads. As a result, you can unlock broader markets and improve sales on your route to growth.
Revenue
Revenue shows the income you are getting from your sales and services before your operating costs have been deducted. It is essential to track this to determine how your business is performing and whether sales are increasing. If sales are growing, it usually means increased demand and increased profit – both of which could signal it is time to develop.
Track revenue over time to keep tabs on any growth patterns. If there is a trend of increased revenue consistently and year-on-year, it means that there is an opportunity for sustainable growth. If revenue fluctuates, it might mean there is still work to do on your existing offering first.
It is crucial to track your revenue alongside your profit. If your income is increasing, but your profit isn’t, it could mean that your overheads are growing faster than your rising sales. Before taking any growth steps, you should consider lowering your overheads and operational expenses so that they remain in balance with your sales income. It is a constant challenge to determine when is the right time to increase your overheads as sales grow and so, as an organisation, you will need to learn to run lean for a period of time to see whether this growth is maintained or not.
Market share
Market share relates to your position in your sector: how many sales are attributed to you as compared to your competitors. Your proportion in the market indicates how much your business has grown over time in terms of sales, as well as how much of the market is left for potential further growth.
You can track your market share by observing your peers. This includes any enterprises that offer similar products, sit within the same industry as you or operate within the same locality or community. Ideally, you want to be taking sales that would otherwise go to your competitors to increase your market share. This does not mean you need to monopolise your sector – healthy competition can actually be beneficial for business growth and give you benchmarks to rise to, depending on the moves your competitors make.
While monitoring your competitors, you should also analyse how big the market is and identify ways you can address new customers. This will determine whether the demand is there for your company to meet, providing you can put the right measures in place. If it is, it could signify that you will see success if you were to expand your offering.
Get growth advice
Profit, revenue, market share, customer satisfaction and demand are all measurable indicators of performance that dictate when it is time to grow. If you see one or a combination of these indicators, you can feel confident in taking the next steps in your business ambitions.
Even if you have identified the opportune moment for growth, you still need to implement effective planning and financial support to help you achieve it. This will ensure you can continue to optimise results and see positive metrics.
If you need advice on growing your enterprise, we can assist. Our team of advisors have experience working with and expanding a variety of business types across a range of industries. As a result, we can offer bespoke guidance tailored to you and your ambitions.