We are Intuit Quickbooks ProAdvisors and have access to the library of resources that the Quickbooks Resource Center has available for businesses. This is an article from that resource center that I especially liked with some additional comments by me…..
It’s no secret that startups have a prodigious failure rate. In fact, according to a recent Entrepreneur.com study, the four-year survival rate for a startup is just 49%. Something the article does not mention is that the survival rate for businesses with a trusted financial/accounting advisor have closer to an 85% success rate.
With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.
Organic Versus Inorganic Business Growth:
Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.
As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.
Of course, inorganic growth tactics are not without drawbacks. By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.
On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.
While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.
Below are just a few of those strategies to help you grow your business organically.
Start the Right Business
Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company. Do your research. Start a business you have a passion for or at least a lot of experience in. Get rich quick ideas almost NEVER pan out.
Hire an accountant from the get go: We can really help!!
Again, the article does not touch on this, but Intuit and Quickbooks are all about selling their products in a “You can do it yourself” frame of mind. But you can’t do it all yourself. Hire an accountant, get strong advice and counsel BEFORE you get too far or you may shoot yourself in the foot right out of the gate. Our years of experience are invaluable to you. We know a lot more about starting, running and building a successful business than people who are just starting out or people whose skill set is not accounting and tax. This is a case of you don’t know what you don’t know and we can speed your success and growth in ways you aren’t even aware of.
Reinvest in Your Company
A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.
Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.
Find New Sales Channels
No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.
Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.
Learn to Delegate and Learn to do it smarter
As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup. Figure out how to work smarter, find solutions and technology that free your time up. Train your employee well and then delegate!
To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.
Set Your Business Up for Success
From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research and consider all the growth strategies available in order to give your business the best shot at success. Again, hire an accounting firm that specializes in helping businesses grow, offers business consultation and coaching, is vey familiar with your accounting software and is up on all the new advancements that you business might be able to employ to accelerate your success and significantly reduce your risk of failing before you even get a chance to fly.
