Many business owners face challenges in figuring out how to expand their businesses in our uncertain and slow growth economy, and it’s a challenge that’s likely to continue with the persistent global financial problems.
While the U.S. economy is showing modest signs of recovery, we have yet to experience a lift domestically, and the high Canadian dollar is creating challenges for exporters. If slow growth is the new norm, how can you continue to expand your company?
The good news is there are opportunities to grow, even in tough economic times. To do so, you need a strategy that makes sense and an ability to execute it.
Here are some strategic ideas that can work, even in a flat market.
•Incorporate lean principles into your company. Lean is a culture first developed by Toyota that encourages employees to make incremental improvements in their business every day. It has been successfully applied in manufacturing and is making its way into services and other industries. Lean starts with defining what is value to the customer and eliminating everything else as waste. The most important long-term success factor is whether employees embrace it as part of the business culture. Implemented successfully, lean can generate long-term savings and competitive advantages for any business in any economic cycle. For an inexpensive introduction, read The Toyota Way by Jeffrey Liker.
•Grow by acquisition. There will be an increasing number of businesses for sale in the next 10 years as baby boomers retire. The trick is to identify those you are most interested in before they hit the market. Can you acquire a competitor and realize cost savings by eliminating overhead? Can you acquire product lines that complement what you have or that provide cross-sell and up-sell opportunities? Can you use an acquisition to launch into a fast-growing market? Low cost debt financing might be available to leverage the acquisition and make it self-funding. There should be a clear reason for the acquisition, making it a “no-brainer deal.” It should be structured so that you have the capacity to execute without disrupting your existing business.
•Do exactly the same thing, but in new geographic markets. If you have a formula that is succeeding, why not use that in new markets? For example, there are significant opportunities in Alberta and Saskatchewan, where growth and skills shortages are driving demand for all sorts of goods and services. Examine the competitive landscape and see if your niche might have demand elsewhere. This strategy will work if you have a compelling value proposition and competition in the new market is manageable. You might be able to minimize risk and capital outlay by using a pull strategy, where customers fund your expansion, until you are ready to set up a physical location of your own.
These strategies are predicated on your ability to execute, which depends on your leadership capacity, people and culture. Growth by acquisition and geography is also a function of the scalability of your processes, which lean principles can help with.
Despite the economic doldrums, you can grow your business by choosing to look outside of your normal sphere of vision. These strategies have been successfully employed many times by many small businesses. One can work for you, provided that you’re confident it makes sense in your situation and that you can implement it. •
