There are very few decisions we make in business that are truly important. These few decisions have the propensity to propel or crash us as entrepreneurs. One such decision is choosing to expand: If not done with care, business expansion can wipe us out. You could grow to your destruction if you choose to expand too quickly. For instance, your growth strategy might require you to expand your current office space, hire more staff, acquire a whole new location, etc. If you do not have sufficient cash to fund this growth, you end up at a worse place than where you started. This is why you need a plan, a budget and metrics to minimize your growth risks.

Develop your growth strategy

Growth should never be embarked upon casually. To successfully grow, you first have to create a map showing how to get to your destination from where you are now. A good growth strategy is simple, clear, focuses on the customer and is specific. Your reason for growth should not be solely based on a random thought of increasing revenue. First you should have a clear vision of where you want to go. In developing growth strategies, less is more. Trying to focus on too many things will cost you more in the long run.

Resource allocation

As mentioned earlier, focus is essential to sustainable growth. If you try to be good at everything, you waste resources. This is because each decision you make has financial consequences. For instance if your growth strategy is to expand services to current customer base by educating key staff in new technologies, then care must be taken to ensure that resources are available to send employees to conferences. If you choose to grow by creating new services for your customer and at the same time want to acquire Mr. Jones practice down the street, you could be spreading yourself too thin. I am not saying one strategy is better than the other, but you will need to choose one and run with it.

Every growth strategy must be allocated resources. Another way to put this, is create a budget. A budget is a great way to make sure your organization stays lean. It is also important that you develop a cash budget while allocating resources. Regardless of your growth strategy, you will need cash to execute. If cash is not readily available in the business, then you will need to find a source to finance your growth plans. The cash budget will show you exactly how much you need to borrow. You can fail before you even start by not having enough cash cushion before taking the full plunge.

Optimize

Once you have a budget, you need a way to determine if you are on track with your growth plans. Metrics allow you to measure how well you are doing. A metric will help you tweak and optimize your growth strategy.

In summary, a business which does not grow will die. However, pursuing growth without thinking of the financial consequences is not wise either. Do not grow to your own destruction! Take the time to plan your growth and make sure you have enough resources to carry out that plan.