Business lifecycle stages: Growth
Once you decide on a growth strategy, it's likely you'll need additional cash to fund it.
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Welcome to this segment of the business lifecycle video series. Hi, I'm Jeff Sloan of StartupNation.com. In the next few minutes, you'll get financial strategies, tips from fellow business owners, and resources that can help during the growth stage of the business lifecycle.
Depending on your situation, growth may mean selling more of your core offerings, adding new ones, reaching new customers, or a combination of approaches. Key considerations for this stage include developing a plan to grow, securing additional financing, and managing the stresses of growth.
Before you make any new investments, you should define exactly what you're planning and why. What is your goal and the strategy to reach it? Has your business plan evolved to keep up? This business owner shares her experience with a strategy for growth and the marketing that made it work.
When the economy, you know, went through the recession, the worst one in my lifetime, you know, all of our current customers said we're going to stop hiring for now. And I thought they meant they would slow down, but they actually stopped. And so, I mean, like really stopped. And so we had to bring on more clients right away.
And so we started an email marketing campaign and through that, through changing our marketing program of what we were doing, and we went to CEOs and CFOs and told them that we could help with cost savings, so we got name brand companies. And today we have hundreds of clients because we changed our marketing program. And through that growth stage, you know, the cash needs changed with the company. And because we have good relationships with our bank, then we were able to get to where we're at today. And it's been lots of fun.
Once you decide on a strategy, it's likely you'll need additional cash to fund it. This may mean applying for a loan or line of credit from a financial institution. Let's see how this entrepreneur used a variety of funding sources to grow his company.
Looking at business growth as it relates to funding, Wells Fargo has been a great partner with us. We obviously have good, working credit lines. We have met our obligations to those credit lines. We have utilized the resource of a term loan in a quick time of need with Wells Fargo. It is up to us to meet our obligations in return to those when they're extended to us, as well as great vendor relationships from our supply chain that have extended those credit terms to us, as well. It all comes back to us meeting our required obligation, and we've done so over the years. So those avenues and resources for financial assistance has allowed us to do a lot in this economy.
Lenders typically look for a range of factors when determining whether to lend and how much. Be sure to visit our Business Credit Center for detailed information on how to build, apply for, and use business credit.
It's reasonable to expect some growing pains during this stage. You may be managing employees for the first time, delegating more responsibility to an employee or partner, or just looking for some good advice to help guide your decisions. Here's some perspective from a business owner who's been there.
At Sweet Trapp Toffee, some of the stresses of starting up your company are finding qualified employees, especially in the kitchen, learning how to let go of control and delegate and train people, as well as the other financial implications that go along with having a company.
At Sweet Trapp, we find that support systems are critical. For that reason, we put together an advisory board that consists of food experts, marketing experts, as well as investors. And the advisory board meets about four times a year to keep us on track.
Now let's look at some common questions about the growth stage. How do I make sure not to overstretch my resources as my business grows? Be realistic about what growth will cost. Project your cash flow situation well into the future and upgrade your funding options to support it. Also, be aware of the risks that success can bring. If things go better than planned, can you support an unexpected surge in business? Both financially and in serving your customers?
My business is growing rapidly and I'm short-handed. Should I hire staff? Hiring employees is an exciting step, but also brings new legal, financial, and management responsibilities. Think carefully about what kind of business you want to be before you take the plunge. Many business owners choose to hire on a contract basis, at least at first, to ensure flexibility and see if there's a good fit.
Thank you for joining us for this segment of the business lifecycle video series. To find out more about other stages in the business lifecycle, click on the relevant video chapters. We'll conclude with a recap of the key considerations for the growth stage of the business lifecycle, and provide you with some additional resources.