Hartford Business Journal

HARTFORDBUSINESS.COM | APRIL 3, 2023 25 A fter creating your business plan, raising capital and opening your doors, your next task is to make a profit. But once the mon - ey is coming in and your opera- tion is sustaining itself, you want to start thinking about growth. How do you achieve growth? The answer is to plan for it. STRATEGY #1: Building for Growth "Before a business can grow, it needs to have a solid founda- tion," explains Joseph Westcott, First Vice President, Commercial Lending Officer at PeoplesBank. "Owners must ensure operation- al efficiency and their ability to compete in the market before they invest in growth." Here are two things to work on if you're thinking about organic growth: Making IT Count As sales orders grow and prod- uct range increases, properly implemented IT systems can en- able more efficient management of sales pipelines and production planning. Owners should assess whether it's beneficial to bring someone on staff to handle IT, or outsource to a company that specializes in this area and essentially acts as your organiza - tion's IT department. Minding Your Margins "Many times, margins still fall due to higher costs from the increased demand for materials Planning for Small Business Growth: Three Strategies to Hit the Next Level P E O P L E S B A N K B U S I N E S S S U C C E S S S E R I E S potential negotiation issues and help you make the final decision. STRATEGY #3: Growing Through Diversification Tight competition in your market may mean it is time to think about new geographic mar - kets, product areas or industry sectors. "More businesses are looking to diversification as a core business strategy," said Mr. West - cott. "Planning and preparation are essential in addressing knowl- edge gaps and mitigating the risks that entry into new markets or product areas can present." Selecting the Right Market Companies thinking about ex- pansion need to answer serious questions to ensure the move and, specifically, the location, match the goals of the orga- nization. Two very important questions to ask are: "Where can I find reliable data to compare alternative sites?" and "How can I establish any new operations in the quickest and most cost- effective way?" Once you have those, you can objectively ana- lyze and score the financial and non-financial elements against the specific factors to make the best decision. Assessing the Risks "In terms of risk assessment, think short and long-term," said Mr. Westcott." Many business owners seeking long- term growth often overlook how much goes into the initial investment. A company may have the appropriate amount of cash available to fund the initial investment. If a certain level of borrowing is needed, this is also a possibility; however, the owner should maintain a disciplined approach toward borrowing during a growth period to avoid a strain on cash flow. No matter how good the long-term op - portunity may appear, if it puts a serious bind on your current business, it's probably not the right move." Business Success Tips: Planning for Growth "Before a business can grow, it needs to have a solid foundation." - Joseph Westcott, First Vice President, Commercial Lending Officer and labor," notes Mr. Westcott. "It's not always easy to know where to make changes first, so if you're embarking on your first cost-containment exercise, it's a good idea to work with a professional, such as a trusted accountant." STRATEGY #2: Buying Growth Whether it's to increase mar- ket share, gain economies of scale by acquiring a supplier or entering a new market segment, acquisition can quickly change the growth potential for your business. Building the Right Team Acquiring a business is a com- plex and potentially difficult process that requires many professional skills, from busi- ness identification to value assessment and negotiation. Sometimes it can help to assem- ble a team of advisors to aid in the process. It will make for a cleaner transition and allow the business owner to also remain focused on their own business. Doing Your Due Diligence "Any business considering an acquisition must conduct due diligence on their prospective targets to assess the risks and opportunities of a proposed transaction," said Mr. Westcott. Proper due diligence will spot conflicts of interest, evaluate the merits of the deal, identify Plan for investment in IT to grow, but that investment will enable increased efficiency The meaning of "Location, Location, Location" shouldn't be lost Assemble a team of a–list advisors to consult with on growth opportunities Don't kill the golden goose – always be mind- ful that there are risks associated with growth 2 4 1 3 Member FDIC/Member DIF 877.888.1388 bankatpeoples.com Sponsored Content

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