For small to medium-sized businesses, there are a number of factors that can inhibit the future expansion of a business β changing markets, the loss of a big client, inability to accurately scale resources. There are five main issues that constrain business growth. This is a big one that affects organisations of all shapes and sizes β and it is largely caused by margin pressure or a squeeze when customers choose a product or service based on the cheapest price.
The reality is, in each market there is only one company that can offer the lowest price point. To compete successfully on price requires ongoing investment in process and operational improvements that effectively reduce the cost of doing business. The alternative is for businesses to refocus their selling proposition on quality and building customer intimacy. Customer-intimate companies are those that define themselves as not just providing a product or service, but as helping their customers be successful through bespoke solutions.
It is common in New Zealand for businesses to have very tight cash flow and limited availability to capital, usually due to high debt. It is up to SMEs to consider reducing their reliance on debt, and looking at alternatives such as cash flow lending, debt factoring and even reviewing their ration of long term vs.
Lack of preparedness in succession planning looms as one of the biggest issues facing NZ businesses. Business owners may think they know the ropes but the landscape has changed β the labour market is tightening, sustainability issues are becoming a part of everyday business and consumer spending patterns are changing as our ageing population takes over.
Therefore achieving continued growth requires a proactive shift in mindset towards how we do business with more progression in the direction of succession planning. A strong governance framework is extremely helpful when it comes to ensuring that enough time, energy and resources are invested in developing strategies to overcoming barriers to growth.
