With more than 99% of the UK’s 5.6 million businesses classed as small or medium enterprises, SMEs form the backbone of the UK’s economy. Despite this, according to the government’s Insolvency Service, the number of businesses in England and Wales that went bust last year hit a 30-year high.
Whilst many UK businesses manage to stay financially afloat, the significance of these figures remains highly relevant to all business leaders. As the UK continues to grapple with inflation, market conditions remain to be some of the most challenging in recent times, yet consumer demand and innovation persist. This paradox means that even healthy businesses can soon find themselves in financial difficulties.
One of the core challenges facing entrepreneurs is navigating the complexities of scaling their businesses. Scaling too fast can result in cash flow problems and operational chaos. However, scaling too slowly can lead to missing growth opportunities and falling behind the competition.
There are numerous strategies for business growth and each one requires careful navigation and execution. Whilst for some businesses organic growth is a rare possibility, it’s crucial to recognise that for the vast majority, each of these strategies either necessitates or is greatly enhanced by securing growth capital.
Automation
Automation. It’s the major talking point in every boardroom across the country. With emerging technologies such as artificial intelligence (AI) revolutionising the workplace, businesses that leverage its machine-learning capabilities may be able to achieve growth at an exponential rate.
According to Microsoft’s Work Trend Index Special Report, 63% of workers struggle to complete the repetitive tasks that take them away from more meaningful work. Therefore, not only does automation present an opportunity to increase workers’ capacity, but the data insights gained from new technologies can unlock revenue streams and open new doors in the market.
This potential means that businesses are now facing an unprecedented challenge to keep pace with the rate of change. Those who do not implement advanced technologies are at risk of being left behind.
Investing in top talent
As the AI revolution continues to dominate the debate, it is important to realise that humans are at the forefront of every technological advancement. Responsible for driving the technology forward and implementing it in the business world, positions such as those in data analysis, change management and strategic leadership are as – if not more – important than before.
For this reason, another powerful strategy for business growth is investing in top talent. However, investing in talent within these areas requires capital, and cutting corners will only hinder the sustained growth of your business. Fostering a culture of continuous collaboration in the workplace and employing experienced professionals is an investment in the future viability and competitiveness of your business.
Expansion into new markets
Whilst it is important to recognise the risks carried with expansion, such as increased competition and regulatory hurdles, expansion into new markets can unlock growth in several ways. Firstly, it can increase your customer base by tapping into new geographic markets or customer segments for higher sales and revenue. Diversification of your product offering also enables your business to reduce its risk by spreading revenue across multiple sources. In today’s age of supply chain challenges and geopolitical risk, this can present a lifeline for your business’ margin. Furthermore, operating in multiple markets can offer a competitive advantage, providing insights across diverse customer needs, access to new resources and widening the talent pool.
Forming strategic partnerships
The most successful businesses are not always the most innovative within their field. Often, they are the result of strategic partnerships or acquisition purchases of those who are. Partnering or purchasing a company with established customer bases in different markets allows businesses to quickly tap into new audiences and uncover new revenue.
Furthermore, strategic partnerships allow for resource sharing, innovation through collaboration, increased brand awareness and credibility, and risk mitigation. By combining the unique strengths and capabilities of multiple businesses, partners can create offerings that are difficult for competitors to replicate, giving them a competitive edge that fosters sustainable growth.
The need for growth capital
Whilst the strategies outlined above can – in some instances – be achieved organically, it’s important to recognise that your competitors won’t wait. With the market becoming increasingly challenging and disruptive, growth capital is a powerful tool in the arsenal of any business. If leveraged correctly, it can be used to implement strategic moves, accelerating your business towards its objectives and achieving sustained growth in the market.
Read more:
How do you scale a business? Unlock potential through growth capital