Charting Your Business Timeline - Years 5 to 10: Growing to the Next Level <b></b>
Opinions expressed by Entrepreneur contributors are their own.
After several years in business, it's not uncommon to find sales slowing, demand slackening and growth stalling as you extract potential from the products, services, customers and markets you began with. One option at this point is to abandon these tiring horses and go in search of fresher mounts in the form of completely new products , services and markets .
It makes more sense, however, for many firms to consider incremental expansion in the form of extensions of existing products and services. Developing a different size, color or packaging is much less risky than coming up with an entirely new product. And slight changes can allow you to sell to significant numbers of new customers in old markets, as well as sell more to existing customers.
Companies sometimes change locations to follow markets, customers and even suppliers, but the biggest reason for relocation is the simple requirement for more room. Employees need space to work, inventory needs space to be stored and, at some point, no amount of shoehorning can hide that it's time to get a bigger place. If you're considering a new facility, carefully analyze the labor force, transportation, communication, customer markets and other infrastructure issues that will affect the move's success.
These middle years are also a good time to turn the focus away from merely increasing sales and start spending more time and energy reducing costs. Larger organizations contain larger amounts of waste, so the bigger you are, the more you can benefit from improving your productivity. Pencil and paper are your biggest allies here, as you create flow charts, step-by-step instructions and systems diagrams to find out where the bottlenecks are, how you can cut waste and which processes may be eliminated entirely. And unlike sales increases, which only turn into profits after the costs of those sales are subtracted, cost cuts go directly to the bottom line.
Only after you really understand your business's systems should you consider turning to technology as a productivity booster. New computers and more sophisticated software laid over a dysfunctional business system will result in higher costs rather than higher productivity. Once you thoroughly analyze your systems and select technology that will help make them run more smoothly, don't forget the training. Much of the cost of new technology comes from having to train employees in its use, but so does much of the benefit.
Who's going to pay for these new facilities, new technology and product development efforts? As a relatively mature company with a lengthy track record, you're now squarely in the sweet spot of banks and private investors. You can negotiate better terms than before, and you may well find financiers competing to do business with your solid, well-established firm. The public markets also open up around this time. While up-front costs are high, initial public offerings give you access to the lowest-cost capital source of all, the stock and bond markets.
A Guide to Business Timelines
- Year 1: Starting Up
- Years 2 to 5: Time to Grow
- Years 5 to 10: Growing to the Next Level
- Years 10 to Retirement: Managing Maturity
- Moving On: Exit Strategies
