Small businesses are the backbone of America's economy. According to the U.S. Small Business Administration, the nation's 23 million small businesses account for 54 percent of all U.S. sales and 64 percent of all net new jobs.
Some successful small businesses, however, make the leap and become big businesses.
Just because a business starts small doesn't mean it has to stay small. Opportunities for growth await small-business owners who are ready to take their company to the next level. Planning and preparation are keys to growing your business.
Prepping for growth
If you expect to grow, you need a roadmap to get there. Here are a few items for the top of your to-do list:
• Know where you're going. What is your mission? That should always be your guiding light.
• Have a solid infrastructure. If you've got a shaky foundation, growth is going to be painful instead of enjoyable. Make sure you have the proper systems in place, such as financial, production, logistics and back office.
• Hire the right team. Not everyone will want to grow with the company, and not everyone should. Make sure you have a dedicated group in place to help reach your goals.
• Remember your customers are always your top priority. As changes occur, what are your customers saying? What feedback can they offer? Whether you speak with customers directly or conduct a survey, know what's on their minds.
• Don't forget about the details. Don't lose touch with the details that make your business work.
There are many options for growing a small business. Find the right solution for you.
• Expand. If your existing location is doing well, consider expanding and opening another outlet. You can own and operate it yourself, or you can franchise, offering the opportunity to someone else.
• Join forces. Does someone else have a similar product offering or idea? Consider working together to expand while sharing the risk.
• Diversify. Add complementary products. If you are a seasonal business, what can you offer in the off-season to grow your business and even out the seasonality?
• Find new markets. How can your product appeal to a new group of consumers?
• Acquire. Is someone selling something similar or providing a service that would complement your existing products or services? Consider growth by acquisition. You might also acquire some great employees in the process.
• Get online. You may already have a small website with basic company information, but think of the number of new customers you could reach by turning your website into an online store.
• Go global. The international market isn't the private playground of big business. In our wired world, anyone can sell internationally. While there will be some preparation work, you can crack the international market and expand your horizons.
Financing your big ideas
Now that you've got your goals in place, it's time to talk money. Your first step should be checking out the U.S. Small Business Administration's website at www.sba.gov. The SBA has a number of financial programs that address the needs of small businesses.
While the SBA itself does not make loans, it does guarantee loans made to small businesses by private and other institutions, encouraging the lenders to qualify more applicants for loan approval.
Before seeking financial assistance from any source, the SBA urges small businesses to evaluate their needs:
• Do you need more capital, or can you manage existing cash flow more effectively?
• How do you define your need?
• Do you need money to expand or as a cushion against risk?
• How urgent is your need? Note: You can obtain the best terms when you anticipate your needs rather than looking for money under pressure.
• How great are your risks? All businesses carry risks, and the degree of risk will affect cost and available financing alternatives.
• In what state of development is your business? Needs are most critical during transitional stages.
• For what purposes will the capital be used? Lenders require that capital be requested for very specific needs.
• What is the state of your industry? Depressed, stable or growth conditions require different approaches to money needs and sources. Businesses that prosper while others are in decline will often receive better funding terms.
• Is your business seasonal or cyclical? Seasonal needs for financing generally are short term. Loans advanced for cyclical industries, such as construction, are designed to support a business through depressed periods.
• How strong is your management team? Management is an important element assessed by lenders.
• How does your need for financing mesh with your business plan? If you don't have a business plan, make writing one your first priority.
For more information about Pennsylvania Institute of Certified Public Accountants (PICPA), visit www.ineedacpa.org.