The latest Scottish Pacific SME Growth Index, by Scottish Pacific Business Finance, indicates that more than 53 per cent of businesses believe they will grow in the first half of 2019. Do you plan to be among them?
Marcus Gray, (pictured left) State Sales Manager QLD/NT with Scottish Pacific Business Finance, explained that the number of businesses expecting to grow has increased from six months ago at 51 per cent according to its SME Growth Index and is now the highest it has been since the first half of 2016.
The SME Growth Index is an independent research study undertaken on our behalf by East & Partners who poll a representative cross section of 1,257 SME owners, CEOs or senior finance staff across Australia, and the latest index was released in early April.
“The Index also found of the 791 SMEs planning to invest in business growth in the next six months, 11 per cent had no concrete strategy in place as to how they’ll execute their plan,” Gray explained.
“The first SME Growth Index was done in 2014 and is completed twice per year. The latest Index released on 11 April shows that total revenue projections, when you combine growth and non-growth SMEs, have more than doubled year-on-year since 2016 from 0.7 per cent to 1.8 per cent.
“Yet there remains considerable headroom to reach the record high all-SME growth forecast of 4.9 per cent notched in the first Index in 2014.”
Gray said one of the most common mistakes made by business owners looking to scale up their business is the absence of a business growth strategy and plan.
“A growth strategy is required to expand beyond organic growth,” he added. “The biggest mistake we see is businesses wanting to scale up, but they haven’t mapped out an action plan”.
“A plan should incorporate their point of difference, which markets they want to compete in by examining market penetration vs. market development, new sales and marketing strategies, and setting up good systems to increase efficiency.
“It should also include a strategy to hire the right staff who are aligned with the business vision and values, finance to support the expansion, and tracking success so you stay accountable to growth objectives and gain feedback from others for continuous improvement.”
Gray warned it was also important for companies looking to scale up to not over-commit in their quest for growth.
“We often see, when there are ambitions for growth but no supporting strategy, companies commit to new contracts that are beyond their capacity to deliver,” he said. “If a new contract is not supported by cashflow, staff and other resources, this can damage relationships which are key to success.
“Or on the other hand, lacking direction and doing the same as today without setting goals and applying the required focus for expansion will also inhibit growth.”