Business growth opportunities can be a balancing act for small and medium-sized business owners looking to scale. It can be helpful to test the waters in terms of market demand, along with your own company's capabilities to meet new demand.
To find the right balance between opportunity and risk, it can help to seek advice from people who have been there before. Your business peers, customers, and financial backers can offer valuable insights to help you find solutions and push ahead.
The support your network provides can ultimately help you capitalize on business growth opportunities. Consider these four tips from entrepreneurs with a track record in doing just that.
1. Look to your customers
In business, your biggest assets can be people – not products and services. Your customers can have valuable insights about your business you may not find anywhere else.
Jenny Poon, founder of the coworking space CO-HOOTS, says some of her biggest business growth opportunities have come from her customers.
“I talk to my customers or potential customers to identify the problems they're facing and then think about the simplest ways to leverage the strengths and networks I have to create solutions,” she says.
For Poon, customers’ problems are just opportunities in disguise. You may not notice them right away, but your customers might. Poon focuses on people and looks to improve their experience which, in turn, improves her business.
“Identify what a customer values and is willing to pay for,” she says. “Then test those ideas: compare them against your market and ask yourself if you can compete.”
Another test to help grow your business involves starting with a “minimum viable product” – one with just enough features to attract an initial base of customers, who can then provide feedback for further product development.
“I talk to my customers or potential customers to identify the problems they're facing and then think about the simplest ways to leverage the strengths and networks I have to create solutions.” -—Jenny Poon, founder of CO-HOOTS
2. Keep a close eye on the market
When preparing to scale, understanding the market can be key. Market research can help identify the best offerings for customers, refine them with new features and options, and pinpoint other business growth opportunities on the horizon.
Brent Thomson, CEO and co-founder of Blip Billboards, has built his digital billboard advertising company this way.
“I look for opportunities that have the potential to benefit my company as the market becomes more efficient,” he says.
Efficiency has taken on heightened significance for customers in the market Blip serves, at a time of continual innovation, acceleration, and automation in digital advertising. Thomson’s focus on these market trends can help him stay ahead of the curve.
“The best opportunities are those where I can introduce new market-wide efficiencies,” he says. “If my success depends on the market maintaining its current levels of efficiency, then my business will be pushing against the tide and less likely to succeed.”
3. Be smart about financing
Positioning yourself for business growth opportunities can be just as important as finding them. For many small and medium-sized business owners, funding can be the biggest obstacle to growth.
Financial preparation ensures you can afford upfront capital costs and can still have the cash flow you need to scale. As Poon says, good old-fashioned savings can go a long way.
“I save like crazy and build an innovation fund so I can invest in problems I want to solve that will yield a return,” she says.
Poon also suggests seeking creative partnerships if you don't have the revenue on your own.
“Sometimes a partner will provide the seed money you need or help build your product and maintain a financially viable business,” she explains. “If that's not doable, I look at investors or bank loans.”
A good relationship with your financial institution can help maintain stability during periods of growth. Business loans and small business credit cards can ease investment and cash flow management.
Thomson asserts that sometimes, in the short term, building a “good-enough” business can be key to financial security, while maintaining a strong vision to plan for the future. He takes this approach, in part, because different types of financial backers can look very differently at growth opportunities in business.
“Providers of debt funding like sound business fundamentals, but aren't terribly concerned with vision,” he explains. “High-risk equity investors, like angels and VCs, invest in vision, product, and market size. Strong vision combined with basic business performance keep both funding sources as options.”
4. Start small to scale big
Taking on challenges can be common when seeking to grow your business, but you can start small to ensure you have sufficient working capital and the right processes in place to scale.
This is what Poon does. When plotting growth strategies, she starts with manageable ideas.
“Identify the low-hanging fruit first, and get in the rhythm of testing those ideas,” she advises. “Lock down your main model and do it well. Then go on to bigger opportunities and expand.”
Key questions to ask when growing your business can include whether you have strong enough people, systems, and borrowing power to handle the needs of a bigger and more diversified company. Scaling too quickly can doom a business. Indications a company is growing too fast can include insufficient cash flow, deteriorating customer service, and declining morale.
Thomson also advises starting small.
“Find business growth opportunities that don't require enormous scale before you can make your first dollar," he says. "This allows you to begin generating revenue early in the business cycle, which both validates the business concept and also produces cash flow that can be reinvested.”
Figuring out how to grow your business successfully can be one of an entrepreneur’s biggest challenges, but it doesn’t have to be a solo effort. You can leverage your network of business peers, listen to your customers, and nurture your relationships with financial backers. Then you can start small to test the waters for customer demand and can make sure your own organization can handle the growth.
A version of this article was originally published on June 21, 2019.