08 Jan 2015
Owning a successful business involves much more than simply making sure it is able to complete day to day operations. At some point, a successful business will need to grow, so that it can increase its profits or take the next step forward. Although there may be a few companies out there who have managed to survive by staying the same as they were at the beginning, the majority of companies that thrive do grow and change over the years.
If your company is beginning to stagnate, that is more likely than not a sign that it’s time to take the next step and bring your business to the next level. Some ways of growing a business take longer than others and require more strategic planning. Other steps will get you to growth quicker.
One way to literally grow your business pretty quickly is to expand it. An expansion can take several forms. You can open a new office on the other side of town, open a branch in a new state, or add on to your existing work space. Expanding can also mean taking on new staff so that you can handle an increase in customers or clients.
There are a few things you want to be aware of before your company expands. The need for the expansion has to be there. If people have been using your services less and less over the past years or months, increasing those services might not make sense. New Direction Capital can help you examine your company’s needs and develop a strategic plan for expanding.
The more you sell, the more revenue your business will bring in, and the better position it will be in for growth. You can increase the sales your company makes in several ways. First, you can focus more on selling the products and services you currently offer. Think of ways to make those products or services more attractive to customers or of ways to reach a new market or demographic with the same product or service. If your current client base consists mainly of other businesses, consider if there is a way to sell your services or products to a client base made up of consumers.
Another way to increase sales and to grow your business is to offer more items or services for sale. Think of complementary products that can be packaged together. If one of your bestselling products is a broom, for example, consider also selling a dust pan, as people in the market for a broom are often also in the market for a dust pan. Make sure customers are aware of the benefits offered by the new products or services your business is offering. Highlight how a new service will help them more than simply using the original service offered.
Sometimes, the best way to grow your business is to join forces with a company that offers a similar or complementary product or service. The ports of Tacoma, WA and Seattle, WA provide an illustration of the benefits of teaming up for growth. The two ports had been fierce competitors for decades, fighting over the same market share. At the same time the two ports were competing with each other, they were also competing against a port in neighboring British Columbia.
Joining forces means that both ports benefit, whether a shipping company decides to use Tacoma or Seattle. Tacoma doesn’t have to worry about losing customers to Seattle and Seattle doesn’t have to worry if a company decides to use Tacoma, as the companies are aligned. The partnership has also helped reduce costs for the two ports. Instead of each working individually to make improvements, the two are planning on working together to make improvements that make the most sense from a financial and investment standpoint.
Growth is a must, but too much, too quickly or not enough, too slowly can negatively impact your business. To learn more about your options for growth and whether it’s the right step for your company now, or how you can prepare for it in the near future, contact New Direction Capital today.
What are your thoughts on business growth? Do you have other suggestions? Feel free to comment below!
18 Dec 2014
Selling your business might not be a goal that’s on the table now or a goal that you ever plan on achieving. Even if selling your company isn’t an option, operating the business as if someone might buy it at any moment is generally a good idea. Running your business as if a potential buyer is looking over your shoulder will help you maintain excellent business records and nip any small problems in the bud, before they become major concerns.
Correct Small Issues Before They Become Big Issues
You can compare a person or company who’s in the market to buy a business to a person in the market to buy a home. While some buyers don’t mind investing in the fixer-uppers, which need a bit of elbow grease before they reach their full potential, the majority of buyers are on the lookout for a turn-key property. They want to hand over the money and move in.
The same is largely true for individuals or companies who purchase businesses. A potential buyer doesn’t want to have sort through the former owner’s problems and mistakes or try to right a sinking ship. If you run your company as if someone could or will buy it at any moment, you learn to keep an eye out for any issues that seem small at first, but can turn into larger problems if not corrected immediately.
Problems that might seem insignificant at first but that can interfere with your company’s success later on include difficulties keeping track of inventory, lease and landlord troubles, and a high employee turnover.
Look at the Books
Keeping strong records is a must, whether your goal is to sell or not. If a company’s financial records are in disarray, potential buyers are often turned off, as they don’t want to purchase something that might be standing on shaky ground financially. Keeping good books doesn’t just appeal to buyers. It can also help you handle the day to day running of your business. You’ll be able to see if the money your business is bringing in is equal to or more than the money that is going out. You’ll have a good idea of how your accounts receivable are faring. If there are any problems, such as employees skimming off of the top, you’ll be able to spot those quickly, but only if the books are in good working order.
You’re in an elevator with a potential buyer and you have 30-seconds to tell him or her about your company. What do you say? Having a simple, easy to explain vision for your company is essential not only when you’re trying to appeal to an outside buyer but also when it comes to the day to day running of the business.
A person who is trying to get up to speed on the policies and procedures of your company shouldn’t have to spend hours doing so. The more time a person needs to understand what your company does or what his or her role in it might be, the less time that person can spend being a contributing member of your staff. Have an outside party take a look at your company’s policies and let you know if they are confusing or if they are clear and easy to understand off the bat.
Another reason why you want to operate your business as if it might sell tomorrow is that there is a slight chance that it might sell tomorrow. You never know what might happen to you or to the others at the head of the company. You want your business to able to continue to thrive and succeed, even if you aren’t able to be there to direct and guide it. Aim to build up your business so that it continues to drive itself, even if you aren’t behind the wheel.
If your business isn’t running as if it’s for sale, the team at New Direction Capital can help. We can help you put your business’ financial house in order, develop a plan and strategy, and overcome any problems along the way. To start operating your company as if it’s for sale, contact us today.
11 Dec 2014
As the end of the year quickly approaches, one question that might be on your mind is “where is my company headed?” One way to not only figure out the direction your company is going in, but to also guide it in that direction, is to set a series of goals for it. A list of goals helps you compare where your business currently is to where it once was and allows you to make informed decisions about its future. Setting goals is just the first step. The next step is doing what you can to make them a reality.
Create a list of every goal your company hopes to achieve. Include small goals, such as moving into your own office space, and larger goals, such as purchasing another company, on your list. Once you’ve listed every possible goal, rank them in order of importance. For example, if might be more important that your business reach a certain level of profitability in the next quarter than it is to move into a larger office space. Prioritizing your goals lets you know which ones are the most important to focus on first.
Map Your Progress
Ideally, the goals you set for your company will be measurable, meaning that you will be able to see how it is progressing on them. Once you have a high priority goal or two, the next step is to break it down into steps and keep track of how you progress with each step.
If your goal is to raise your company’s profits by 5 percent by the end of the quarter, think about what you will need to do to get to that point. You might want to bring in one new client a week for six weeks, for example. Plan out ways to get those new clients. It can mean attending networking events weekly, asking current clients for referrals, or even cold calling potential customers. When you do land a new client, record what you did, when you did it, and how it impacted your company’s profits.
Be Able to Adapt
The world of business is always changing. New products and ideas become available on a semi-regular basis, which alter the way things are done or change the competitive landscape. That means you should always be ready and able to adapt to changes in the world around you.
Being able to adapt can mean several things. It means being flexible enough to rethink your plans and strategies when something new comes on the market that changes the landscape around your company. One example is online stores that offer free shipping at all times while other stores still charge a fee. Having competitors offer free shipping on all orders can make it more difficult for you to expand your customer base, as the customers might prefer to work with the company that ships items, as it reduces cost and risk to the customer. Instead of only focusing on ways to add to your customer base to increase profits, you might also want to find a way to offer free shipping that doesn’t affect your bottom line too much.
It can be easy to try to go it alone when it comes to setting goals. But, having a team to work with you and to offer you insight and perspective is often very helpful. A virtual CFO can help you understand your business’ financial details, for example. Using that financial information, he can help you create a plan to reach certain financial goals, whether those goals involve increasing your company’s profits or reducing its debts.
You can try to do it all yourself, but doing so often leaves you over extended, which creates a barrier to achieving your goals. The team at New Direction Capital is available to help you develop your company’s goals and to create a plan for action. To create a plan for your business’ future, contact us today.
04 Dec 2014
Until someone successfully invents a time machine, every person will only have 24 hours per day and seven days per week. Although everyone has the same amount of hours, minutes and seconds per day, it seems as though some people are able to get more done in that time than others. When it comes to increasing your own and your company’s productivity, the cliche “work smarter, not harder” comes into play. Use the following tips to make your days more productive, without spending more time hard at work.
Make a Plan for Your Day
At the very beginning of every work day or the end of the day before, create a quick plan or list for what you will do that day. Having a set list of tasks to do, that you know that you have to do, will reduce the likelihood of other issues arising and derailing you from getting done what needs to be done. Write out your plan and cross off each task as you do it so that you feel a sense of accomplishment.
Focus on One Task at a Time
Your mind is designed to focus on one thing at one time. Although multi-tasking was once revered, it’s now seen as a way to limit your productivity. When you try to send an email while carrying on phone conversation, the quality of one or the other, if not both, will suffer. It’s better for you and the people you’re working with to send the email before or after you speak with someone on the phone.
Divide and Conquer
Another way to get more done in less time is to make your day seem longer. Instead of looking at your work day as made up of eight or so hours, look at it as made up of a series of 15-minute units. By doing so, you can effectively quadruple the amount of time available to you. For example, instead of scheduling your company’s morning meeting from 9 am to 10 am, schedule it from 9 am to 9:15 am. The shorter time will reduce any slack and force you and your team to focus on the important issues.
One thing that hurts productivity is trying to do everything yourself. There are a number of tasks and projects that can be handled more efficiently by a person who specializes in those tasks. For example, outsourcing your company’s financial tasks to a virtual CFO or outsourcing your company’s social media projects to a marketing firm will allow you to focus on other pressing tasks.
Take a Break
Taking a step back from your company or work can actually make you more productive in the long run. Just as athletes sometimes need to take a day off to allow their muscles time to rest, business people sometimes benefit from taking a break to let their mind rest. A break can take several forms. It can mean stopping a project and getting a cup of coffee or glass of water every 50 minutes or so. It can also mean going away on a vacation, only to return to the company revitalized and full of new ideas.
Along with regularly scheduled breaks, you can boost your productivity by making sure you don’t spend too long at work and by making sure you get an adequate amount of sleep. Getting enough sleep helps improve your memory, which will make it easier to work through certain tasks.
Some aspects of modern business life provide both a benefit and a curse. Email, cell phones, and social media mean you can reach out to pretty much anyone, at any time. But, they can also derail your plan for the day and keep you from checking things off of your to-do list. One way to reduce distractions is to schedule set times for checking and responding to email each day and set times for browsing social media. For example, try checking your email just twice a day, at the beginning and end, and see how much time it frees up for getting other, perhaps more important things, done.
Working with the team at New Direction Capital means that you can spend more time focusing on the day to day requirements of your business. To learn more about how the services we provide can help you boost productivity, contact us today.
Finding capital for your company is key to its continued success and to its growth. Financing allows your business to take the next step or move to the next level. While borrowing money or taking on debt is one way to get the capital your company needs, it’s not the only option. Businesses also often choose to receive equity financing, either along with or instead of taking on debt. We discussed the benefits and risks of debt in a recent post. Today, we’ll take a closer look at the advantages and drawbacks of equity financing.
The Source of Equity Financing
One of the major differences between debt and equity financing is the source of the money. Debt financing comes from a lender, such as a bank. Equity financing comes from an investor in the company. The relationship between a business and an investor is considerably different from the relationship between a bank or lender and a business.
Since an investor is taking part ownership of the company, he or she will generally be more involved in working with you and in overseeing certain aspects of the business. The investor now has a stake in your business, which usually means that he or she will be more inclined to see it succeed.
Benefits of Equity Financing
The relationship that develops between you and the investor can be seen as an advantage of receiving equity funding. Often, an investor has ample experience, not only investing in business, but also in understanding the ins and outs of the market. Some investors are more hands on than others and may offer your company guidance as it grows. Whether an investor is very involved in your business or not, most understand what a company needs to grow and the time it takes to develop a business or to take the next step.
Equity financing can also help boost your company’s reputation. If one investor decides that your service or product is worthwhile or that it has the potential to be profitable, other investors might also take interest in what your business has to offer. Interest from multiple investors not only means the potential for additional financing. It also means the potential to build and develop strong relationships in the business world.
Risks for Business Owners
While there are certain rewards when it comes to working with investors, there are also some risks. Finding the right investor can take some time. It’s more about building a relationship with the source of the financing than it is about successfully completing an application. There’s a risk that an investor and a business won’t be a good match, which can create conflict down the road.
While you don’t have to make monthly payments to your investor the same way that you make to a lender, there is an expectation that your company will produce a return on the investment. Not establishing an expectation for that return with the investor before entering into a financing agreement can create issues if your business is successful or if it encounters difficulties. Making sure that you and the investor are on the same page in terms of expectations is one way to reduce the potential for conflict.
If a business and investor can’t come to an agreement, there is a way to end the relationship. That involves one or the other buying the other out. Buying out an investor can be expensive for you, as you’ll usually need to pay more than he or she originally invested in your company to get that share of the business back.
Deciding between debt and equity financing isn’t necessarily an either/or choice. Your company might benefit from some debt and some equity or more equity than debt. The decision might also depend on how established your business is or where it is in terms of growth.
Working with a virtual CFO and the team at New Direction Capital means that your business will be able to make the right choices for it when it comes to finding capital and when it comes to building relationships with investors. If it is time to take the next step and you are looking for ways to grow, contact us for more information today.