Expansion can be a scary or exciting word to someone depending on the type of personality. Like an athlete, training to become a champion is excruciating, however the reward for your efforts can be life changing.
In business, expansion for a Small or Medium Enterprise (SME) can be difficult due to the lack of knowhow, lack of willingness or lack of uncertainty.
Some of the major reasons for expansion for an SME business are:
- Identification of new opportunity
- Desire to increase revenue
- Landed a new major client
- Entrepreneurial drive
- The excitement of a challenge
However, on the other side of aspiration there are significant reasons for hesitation for expansion with 37% of SMEs holding back due to concerns about the economy, competition or fear of debt.
Here are six reasons and percentages showing why SMEs are shying away from growth:
These statistics show a lack of understanding about their business or the environment they operate in. The importance of having the right people, resources, tools and vision for your business is apparent for SMEs in Australia. Surrounding yourself with people who can assist in business structures, strategies and systems is a sensible option.
Further evidence shows the major topics that SMEs seek advice on for their business are:
- 34% finding new opportunities
- 33% business planning
- 29% tax/legal advice
- 26% validation of ideas
- 24% connecting with key people in the know
- 24% market insight
The areas mentioned where people seek advice are common, however it is amazing how many people still try to do this on their own. More interesting is the thinking amongst different demographics with 44% of businesses over 21 years old seeking advice from external experts, however only 18% of businesses 1-3 years old seek advice from external experts.
On the flip side the millennials are more likely to use their personal network more than baby boomers with a split of 31% vs 16%.
Surrounding yourself with key people with the skills to assist you in the core parts of your business is crucial. Quite often within the building industry businesses trial and error all the way through their business journey, creating many mistakes and causing pain to themselves and the people around them (family, friends, colleagues, trading partners etc). The home warranty scheme was introduced to protect the home owner from the high volume of builders going broke or providing inferior workmanship. An alarming statistic of 1,113 builders in NSW became insolvent in the 2011/12 financial year and the home warranty scheme is currently in the red to the value of around $1 billion.
The days of just being a builder are almost non-existent, with the need for builders to become businessmen increasingly evident. A builder’s journey usually starts as an apprentice carpenter, carpenter, builder on small jobs and then the appetite for increased revenue is all too appealing. This is where the pain points begin due to growth puts a strain on cashflow, requires additional personal, new building specific systems and the need to run a business now, however the development for a business owner in this industry is minimal.
Finding experienced people supporting you in the key areas of a building business (home warranty,business support/management, accounting, workflow systems, general business coaching etc.) can be a breath of fresh air and should be one of the topics high on your agenda for creating a successful business moving forward.
SEE Business Solutions can assist you with all of these things and can work alongside you to take your business to the next level. Contact us today.