The Thomson Reuters/PayNet Small Business Lending Index (SBLI) released in February 2017 is showing a decline in investment growth for small business, which suggests small businesses are not looking confidently to the future. The index decreased 5 percent from January 2107 to February 2017 and down a whole 4 percent from the same month last year.
A slowdown trend is emerging in the sectors that normally show growth, including retail, construction, and agriculture. It shows finance and arts merely in “maintenance mode.” Where does your small business fit into these index predictions? Have you experienced a slowdown?
The dreaded plateau
When you first start your business, your passion is at its peak. You have a clear business plan, capital to invest, a small team of excited creatives ready to jump in feet first. Though these can be the hardest and longest days, they are also often the most rewarding for entrepreneurs when they see the fruit of their hard work starting to pay off. The business builds and rolls toward profits.
After time, experts usually say when a business reaches the high 6- to the low 7-figure range, there’s a plateau where the rise use to be. Growth slows or stalls. This is when the business, the owner, the core employees show their mettle or run into trouble.
Ways to break through the stall
Passion, expertise, and skill are the foundation for a new business, which builds on an innovative or useful service or product. If those pillars do not change, then why does a business plateau? Moreover, how does a small business owner work through?
Ask tough questions. To pinpoint the cause, ask these questions:
- Are we doing something wrong?
- Are customers returning?
- Have operating costs increased?
- Is there more competition in our market?
- Has market demand decreased?
- Are we spreading ourselves too thin?
Pour over your income statements, run your Google analytics, talk to your customers about their experience and expectations, negotiate with your distributors and partners.
Check your complacency. That initial passion is tough to maintain. Burning the candle at both ends, throwing all you have into making your idea a success takes a lot of energy. Once you feel on stable ground, it is easy, and maybe even necessary, to go into cruise control. Enjoy your success, breathe. Just don’t do it for too long, because on cruise, you aren’t planning your next step.
Consider what you are willing and able to do next. A significant investment of time, money and resources, making difficult decisions about core services and core employees, even going for a time without income are possibilities. How many difficult decisions are you willing to make?
Financial investment is likely a necessity. Securing additional capital to build your technology infrastructure, devote resources to research and development of new services or products, hire new talent, increase your fleet, or jump-start your marketing, can pump new life into a stalling business. It takes planning, control, and risk.
New hires and new fires. Do you need to hire a second tier of managers to grow a product line or diversify your marketing push? Alternatively, do you need to let someone go, who may have contributed to the initial growth of your business, but has been outgrown? Neither are easy prospects.
For new talent, mine your connections through online avenues like LinkedIn, and be ready to offer a suitable onboard package for upper to mid-level managers. This might mean looking for alternative lending options to boost your cash flow, or taking a drastic pay cut yourself to boost the potential new-hire budget. Use online resources like this cost-per-hire calculator or this bad-hire-calculator, which helps you understand the implications of making the wrong pick (as much as $50,000 for one bad hire).
You are an entrepreneur, a small business owner, but not an HR expert. If you have to let, an employee go, do your research first to avoid issues later. However, if the separation is one you deem necessary for the continued growth of your company, make it happen.
Introspection and monitoring are necessities for every business, no matter the size or industry, but small businesses fall more easily into the trap of not seeing the forest for the trees. Working tirelessly on day-to-day issues, focusing on today and not the future, until the future mirrors the SBLIs predictions of a slowdown. The dreaded plateau is inevitable but beatable.
Has your small business hit a plateau? How are you pushing past?