Essex-based business consultant, Stuart Allan talks to Business Time in Essex about business growth vs profit
Ask a business owner what they would most like to improve about their business most of them will tell you it’s their profits. We have all heard the stories about millions made overnight, but the reality is that for the majority of businesses, rapid growth is both harder to achieve and potentially hazardous. In my experience, the link between business growth and increased profit is often tenuous and bigger is not always better!
That’s not to say you can’t achieve growth and profitability. It just means that you need to understand that growth and profit don’t always automatically align. Significant growth in any business is going to require change and investment, and we’ll look at just a few of those factors to see how easy it is to spend more and realise less.
Whether you are moving up from a solo venture or taking on a few more contracts, expanding your team can be a costly venture. Make sure you factor in the costs of employing staff when you are quoting for new business; from one-off costs such as recruitment to ongoing expenses including wages, NIC, pension contributions, training, HR and IT equipment; it all adds up. A report by The Undercover Recruiter estimated that year one employment costs can be almost double that of actual salary.
The bigger your business, the more space you will need. Unless your staff are all working from home, you will need to rethink your layout or seek bigger premises. The cost of moving, increased rent, additional furniture and equipment need to be allocated to your cost of sale.
Depending on the industry you work in, you may look to increase the range of products you manufacture or sell as part of your business growth. Establishing multiple revenue streams will have an initial high-cost outlay but often offsets revenue loss if market trends dip for certain products/services.
Ready to go for it?
It is entirely possible to grow your business in size and profitability. By setting goals, creating a strategy and seeing them through, you can achieve excellent results, faster than you may expect. Conversely, you may find that identifying and focusing on the highest performing products or services can be equally transformational.
Let me introduce you to the Orbit Map. I developed this unique tool during my own 25+ years as a business owner and use it with every one of my clients today. Until you have taken a forensic review of your operating costs and profit streams, you cannot realistically set achievable goals or track your progress.
Working with a business consultant can help you to understand every aspect of your business, both now and how it could look in one to five years. In the short term, identify what makes you money, and what doesn’t. It is all too easy to keep a retained customer or contract that guarantees you a set monthly income, but if it is only producing a small profit, or as is all too often the case, actually costing you money, then it’s time to review! Once you know where your profit is, you can decide how to increase it. It may be through expansion; it may be through a change in pricing structure or some other initiative.
If you are ready to start making your business more profitable, get in touch to find out how we can work together to transform your business in 2019.
About Stuart Allan:
Stuart Allan is a business consultant and growth specialist based in Colchester, Essex and works with companies throughout the South-East.
Stuart founded Essex-based premium dessert company Indulgence Patisserie Ltd in 1987, turning it into a multi-million pound international operation by the time of its sale in 2013.
Accredited to the Government’s Growth Accelerator Programme, Stuart is a Business Mentor with the British Army, and has recently been appointed as the on-site business coach at the Essex CEME Campus.