Running a small to medium business takes blood, sweat and tears… and a whole lot of planning. Your first year in business is spent attempting to execute the initial business plan, finding out how reality matches up to your expectations about your business and industry, and trying to achieve the basic successes you will need in order to carry on into the next phase of business ownership.
As you emerge from the important and exciting start-up phase you are faced with a new set of challenges and the need to get back to the drawing board in many respects; amending and updating your plans according to how that first year panned out. You also need to clarify exactly what you want from the enterprise so you can work towards goals that are appropriate for the size and approach that you ultimately want to achieve for your business.
To help you refocus and figure out what the future holds as you move beyond the start-up phase, we’ve put together this guide covering some of the key things you need to consider and work on. The guide also explores some of the possible avenues you might want to work towards as part of your business’s growth.
The following topics are covered in the guide:
- Evaluating your performance so far
- Understanding what you’ve learned
- Saying goodbye to the honeymoon period
- Writing a new business plan
- Expanding (national and international growth)
- Hiring staff
Knowing how your business is performing so far, where you want to take it in the future and how you plan to get there is essential to ensure your business is one of the fortunate few that make it beyond the difficult five-year marker into solid success.
Evaluating your performance so far
Before you can figure out what to do next and how to go about doing it, you need to understand where your business is at right now. This includes checking how your company is measuring up against the most recent projections and what progress you have made on your business plan.
The current iteration of your (always-evolving) business plan is the best place to start. Go through each point in the document and compare your plans and projections for the present time with how the business is actually doing. The financial projections are of course one of the most key – whether you are meeting, missing or exceeding your projections could heavily influence what your priorities will be as you move into the next phase of running your business.
Understanding what you’ve learned
During the first year or so that you own a business you will learn a lot about yourself, your business and the wider industry you’re operating in. When you look to grow and expand the business it’s essential to reflect on all these learnings so you can make changes and plans with your newly acquired knowledge and experience in mind.
Ask yourself the following questions:
- After starting the business did anything go drastically differently to what you expected?
- Did you discover strengths or weaknesses in yourself or your business model that you hadn’t anticipated?
- Did you identify any new opportunities that you could explore in the future?
- Did you meet any unexpected roadblocks?
- If so, can these problems be overcome? Or do they signal the need for a change in strategy?
These kinds of questions will help you get a good understanding of how your business is performing, plus you’ll gain valuable insights into how you personally operate as a business owner. This can help inform decisions about the kind of staff you might want to hire if you’re looking to bring more brains into the business – people whose skills will complement your own, and who will add something that the business is currently missing (or just needs more of).
Saying goodbye to the honeymoon period
One of the challenges you face as you emerge from the start-up period is that some of the initial excitement can fade. Second years in business are notoriously difficult because it’s all about proving yourself and making sure that all your plans are coming together, without the buzz of being a brand-new business to keep you motivated and to spark the interest of others.
Arguably, it’s at this point that the really hard graft begins and it’s important to bear all this in mind when preparing for the second phase. Relationships you’ve built within your industry, especially with other similar-sized businesses, could become really important at this point. Networking and continuing to maintain these relationships is important for keeping up the momentum of your growth and stabilising your business. But it’s also important because the community around you will help you to keep pushing through the difficult transition from a new SME to an established and successful business.
You should also continually seek expert advice and know that you will never stop learning how to get the most from your business. The Barclaycard Business website has an SME hub full of guides and information, and there are many other online resources to help you stay focussed and keep moving forward.
Writing a new business plan
In many people’s minds, a business plan is firmly positioned as one of the key tasks at the very early stages of starting a new business. It is how you secure your initial funding and it’s the basis for everything you do in your first operational year. But in truth, once you own a business of any kind, business plans will be a constant feature in your world. Although it may regularly be amended, updated and tweaked, a working business plan is the foundation for everything you do.
That’s why it is essential to create a new business plan explaining how you plan to move your business beyond the start-up phase. As part of your new business plan you should identify a series of new goals, and be clear about how you will measure your success. Your business plan should include or inform a strategy that explains how you will achieve each objective, identifying any dependencies and interim goals.
Some of the steps you may want to take next for your business could include expanding your customer base, hiring more staff or taking the business from a local to national (or national to international) scale. If achieving any of these objectives will require further investment, for example, your business plan should outline the size of the financial boost needed, how you will use this money to achieve your goals, the time frame and how you will know when you’ve been successful (ie will it be measured by profit, new customer growth, sales or something else?).
The plan should give you a clear roadmap towards your next milestones and act as the rationale for any new funding from investors, a bank or elsewhere.
Expanding (national and international growth)
For many SMEs, starting locally is the best way to get a business off the ground, test the demand for their services and build a loyal customer base among the consumers that are easiest to form relationships with. Once your business succeeds on a local level, a logical next step is to expand into the national or international market.
If this is part of your second phase plan, it is important to carry out new research before getting stuck in. You need to understand how your market will differ on a larger scale and across greater geographical reach, and you need to know for sure that there is national or international demand for the products or services you offer.
Once you know what the opportunity is in the markets you want to explore, you can look into other factors such as whether you need to hire specific expertise to help drive your expansion, or how the expansion will work logistically. For example, will you need to open a second office location? Will you need different language capabilities? Are there any regulations that will start to impact the business as you move into bigger or overseas markets (for example regulations around international trade in services)?
You should also research who your new competitors will be once you expand. Who they are and how they operate could impact majorly on your business plan and the factors you’ll need to consider in order to make your expansion successful.
Hiring staff
If hiring more staff (or even your very first member of staff) is going to be part of the second phase for your business, it is vital that you know what skills and characteristics you are looking for and where to find the right candidates. You may be looking for someone with very specific expertise, or simply a person who is passionate about your business and can add to the people power you are already working with.
Either way, knowing what your skill gap is will help you to write a descriptive job advert that will attract the best qualified people. You should also detail all the benefits of working for your company and give a sense of the kind of working environment you offer. All these things can be factors in whether the right person will choose to apply for your vacancy.
Although budget will still be tight, it’s worth investing a little in the hiring process. Taking out adverts in prominent national press will get your vacancy in front of thousands of potential candidates. Similarly, it’s a good idea to use sector specific, local and national job boards to reach out to the most qualified and passionate candidates. Networking at conferences and trade events, as well as simply speaking to associates and friends in your industry, can be a great way to track down excellent potential colleagues and business partners.
Further reading on business planning
