Business Finance

For many business owners around the world – especially in light of how turbulent the early 2020s have proved to be from an economic and geopolitical perspective alike – it can often feel like mere survival from one year to the next is a major achievement.

And sure enough, keeping a business afloat from year to year is a significant achievement for an entrepreneur, as borne out by the statistics.

While, for instance, business enterprises established in the UK in 2020 had a one-year survival rate of 92.9%, when one takes a longer-term perspective – looking at businesses founded in 2016 – only about four in 10 (38.5%) of them were still operating in 2021.

What is meant by ‘sustainable’ business growth?

If you’re curious to gain some insight into why so many new companies struggle to reach that five-year milestone, one clue could be the sheer complexity and difficulty involved in trying to achieve sustainable business growth.

The typical new business can undergo any of a range of growth trajectories, and can hit trouble in this regard for a multitude of reasons.

A given firm may, for example, grow very rapidly on the basis of demand for its products or services – which might, on a certain level, sound like excellent news – only for difficulties in attempting to fund that growth to hamstring the company’s longer-term expansion prospects.

Other newly founded businesses may only grow very slowly, and continue to be sluggish in their growth, which might lead to stagnation – again, not a good situation for a business’s longer-term survival.

Then, there are the companies that start out brightly enough, but which subsequently suffer from declining sales. Such a circumstance can eventually lead to bankruptcy for what is still likely to be a relatively small business.

So, to return to the question we posed at the top of this section: what is sustainable business growth? We’re referring here to a rate of growth that a company can realistically attain in the first place, but which it can also realistically maintain over the ensuring months and years, while generating healthy profits, and minimising the risk of running into problems that imperil the business’s survival.

It isn’t the easiest of balances to strike, but it is a crucial balance, nonetheless. So, what are some of the strategies that will help you make genuinely sustainable growth a reality for your company?

What sustainable growth strategies might you consider for your business?

Having read all the above, you might be thinking to yourself that surely, the question of which strategies are and are not likely to lead to sustainable growth for a given business, will hinge greatly on the nature and circumstances of the business itself, as well as how the particular strategy is executed.

All of that is true – but there are nonetheless certain strategies that do have a good track record of helping to drive sustainable business growth, when they are done well. These include the likes of:

  • Market development strategies, which are geared towards developing a given business’s presence in new markets. This can be a fairly sustainable type of strategy, due to the scope it presents for a business to keep on expanding its market presence, thereby creating new opportunities for growth, instead of attempting to depend on just one route to growth.
  • Diversification strategies, which are about taking businesses into new markets, or introducing new products in sectors that are related to what the given company already does, while also being in some way new. Such a strategy can be sustainable due to how it helps the given business to find new customers, without imperilling the essentials that have helped it to already achieve success among certain target audiences.
  • Product development strategies, which concentrate on introducing new products or services to markets in which the particular business is already active. There is, of course, a degree of risk involved in attempting to decide on and then develop products or services with the aim of ensuring these resonate with audiences. However, when this type of strategy is implemented well, it can be a powerful means of helping a company to stand out from its rivals.
  • Business partnership strategies, which entail two or more businesses joining forces in order to work towards a specific goal. This is a higher-risk business growth strategy than some of the others outlined here, as much hinges on the ability to find the right business to partner with. However, if a suitable business partnership is achieved, it can be a very effective strategy for driving sustainable growth. After all, it would allow a given business to make the most of its own core competencies, at the same time as leveraging the expertise of its partner in areas where its own knowhow and resources may be low.

Then, there is the question of achieving sustainable day-to-day financial management

While creating and putting into action strong overarching business growth strategies like the above can be integral to your efforts as an entrepreneur to keep your business afloat, there are also certain steps that must be taken specifically in relation to how the given company’s finances are managed.

Are you, for example, taking the following steps to ensure your firm achieves sensible and sustainable financial management?

  • Creating, and maintaining, a detailed budget, including carrying out regular reviews and adjustments to make sure it is still pertinent to the current status, circumstances, and aspirations of the business. By putting together and maintaining an in-depth and up-to-date budget, you can leave your company much better placed to set clear and realistic financial goals. It will also help you keep an eye on the firm’s progress, and guard against the risk of irresponsible financial management that would hinder your business’s growth goals.
  • Taking every opportunity to streamline business expenses, as identified through a periodic auditing process. There will almost certainly be areas of “flab” in how your organisation operates, where there is scope to minimise inefficiencies and reduce costs, without compromising the quality of product or service your customers or clients receive.
  • Keeping informed on new financial trends and technologies – and incorporating them into the business where relevant. There are constantly new tools and technologies coming on stream that can aid a business’s day-to-day financial management – and with it, the organisation’s prospects of achieving genuinely sustainable growth.
  • Researching the 21st-century finance solutions your business could benefit from. Building on the theme of the above point, it is also important to know that the business finance solutions that existed this time 10 years ago, or 20 years ago, could be quite different to those that are becoming available today. Is it the right moment, for instance, to tap into the benefits of invoice finance, trade finance, or asset finance for your company? Researching these possibilities can help ensure you are well-placed to make responsible decisions.

Sustainable business growth doesn’t have to be an impossible goal

There you have it; just a few of the measures you could implement for your business that will aid your goals of achieving sensible financial management, which in the process, will support the company’s sustainable growth ambitions.

The great news is that while achieving sustainability in how your business expands might seem a very difficult balance to achieve, there will almost certainly be a path for you to achieve it.

You should be sure, though, to also carry out analysis of the outcomes of such measures for your company. This way, you will be able to make the informed decisions going forward that are likeliest to put your organisation on a path to truly sustained success.

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