When most people think of growing a business, they think of increasing revenue. A few consider expanding to new locations. There are significant measures you can take to increase the health of your business – sustainability may be a better phrase. Are they growth initiatives? Since most people don't think of them as growth, probably not, but they do lay the foundation for sustainable growth. They also reduce risk – a great thought in the current risk averse economic climate – and solve problems for the business in the short term. Let's take a look a couple important sustainable growth concepts.
Leveling Cashflow. A lot of small to mid-sized businesses, especially consulting firms, or those based on project work, have huge spikes in the flow of revenue. I think of these organizations as ‘home run hitters' – able to take on big projects and not need many of these to get by. The world needs home run hitters to deal with big projects. But when you aren't in a home-run economy, and the big projects are all on hold, you business can dry up completely. Most home run hitters need to establish a secondary business pattern, one of building numerous smaller opportunities which can keep cash flowing while awaiting the next major opportunity. A base hit, if you will.
It takes some retraining to be able to properly address smaller – but more numerous – opportunities. Usually what's required includes reformulating a product or service offering specifically to appeal to this market. It often means a shift in focus or methodology which can shake up a smaller company. The benefit though, is in establishing a survival strategy, which allows you to live through extended periods without major opportunities. Taking control means not allowing your company to be at the mercy of the economy, by constantly adjusting.
Sounds almost Darwinian – evolve or perish.
The second related issue is of Client Diversification. If you have 2 or 3 major clients who account for the lion's share of your revenue, you tie your fortunes to theirs. And to their willingness to continue to be a client. While it's great to have a few major clients, there's significant risk on relying on them, and too many external factors impacting your revenue stream. Again, it's time to take control.
Diversifying your client base often has much in common with establishing sustainable cash flow, and a single well-planned initiative can encompass both of these goals. The aim in diversifying, is to establish entry-level relationships which have potential to blossom into larger potential. This also allows you mitigate the risk of losing a major client, by having more revenue sources. If I can return to my strained baseball analogy, you add reliable base-hitters to your home-run hitter, to build a team – not a one-man show. A team has more strengths to draw on, and allows you flexibility. Most importantly, you don't rely on the economy or large clients to control your fate.