How to Grow Your Business without Losing Control
Building a business is a labor of love for many businesspeople and entrepreneurs. Growing a business often requires plenty of sweat equity in addition to a well thought-out plan. At some point in the growth process, the need for capital growth becomes urgent enough that business owners and managers start to think about taking in outside capital.
In other cases, a business may try to grow too fast and find that it needs to bring in either outside capital or outside experts to get back on track. Whatever the circumstances, there are many situations where it is difficult to stick to your vision for the company, either due to a business setback or to the demands of outside investors. This article discusses how these situations can occur and describes ways you can overcome them and retain control of your company and the vision which drives it.
Turn Down Offers that Require a Change in Company Focus
If your business is growing rapidly it can be tempting to look for outside capital to help finance that growth. However, if doing so means you have to accept an offer that requires your company to change its focus, you may want to think twice before accepting the offer. While additional capital is welcome in situations such as these, if it causes your company to lose its competitive edge by changing its company culture or business focus, taking the money can actually be counterproductive.
Sometimes it’s necessary to make the hard choice to turn down offers that don’t coincide with your vision for the company. Taking a long-term approach can help you separate good offers from bad by focusing on how a capital investment is likely to affect the company over time. Even if the capital provider doesn’t ask you to make any dramatic changes to the company immediately, they may ask for certain rights that will allow them to affect company strategy if they desire to do so.
Accepting outside capital may require you to give up some control of the company’s direction. This risks compromising your vision for what the company is and what it should attempt to achieve. This is especially true of advertising agencies and technology companies. Any offer that gives outsiders partial control of your company’s destiny should be considered carefully before acceptance. If you decide to take such an offer, do your best to find investors who share your same vision.
Even when outside investors do share your vision for the company, there is always the chance that this could change at some point. If it does, an agreement should be designed to ensure that you can still maintain control of the company and its strategy. Structuring an agreement to provide you with this type of protection can be complicated, so make sure to consult with advisors experienced in these types of deals before closing any transaction.
To avoid getting into a position where your business is reliant for funding on others who may not share your vision, track the results of your marketing campaigns closely. Expending money without a commensurate ROI is a sure way to create a cash crunch. To remain independent and stay true to your vision, monitoring the results for every marketing and advertising dollar spent is essential. A lack of monitoring is what created turmoil among many Chicago advertising agencies back in 2002 when many attempted to fund growth at the same time.
Online marketing tools make it much easier than ever before both to precisely target your marketing campaign and to accurately measure its results. If your goal is brand awareness you can track the number of impressions, or views, your ad receives for each dollar spent; if you are looking for conversions, you can track your CPC (or cost-per-click), which measures how much you are paying for each click on one of your ads.
Whether your business is focused on online sales or has a physical brick-and-mortar presence, tracking your marketing efforts from an ROI standpoint just makes sense. If you collect that data, it can also help retain control of your company by avoiding a cash shortage, which can ensue when marketing dollars are spent unproductively.
Stay on Top of Trends
The list of businesses that have been supplanted by competitors because they were unable to adapt to new developments in their industry is long. How can you help your company avoid such a fate? The key is to stay on top of the latest trends affecting your industry and business as a whole.
There are a variety of ways to do this. Having feet on the ground (or the digital equivalent for online businesses) is a tried and true way to get a feel for what is happening at the ground floor level in your industry. You can also browse blogs or publications that focus on your industry to get a picture of what expert observers see going on in the industry.
Once you’re able to venture an informed opinion of the major trends affecting your industry, take the necessary steps to position your company to benefit from those trends as far as possible. This can involve experiencing some short-term pain to realize long-term gains. For instance, you might find that to stay competitive, your firm needs to acquire the latest industry-specific technology. While purchasing this technology may impair profits in the short run, in the longer term it could position your business to gain greater profits and stay at the forefront of your industry.
Avoid Business Mission Creep
One way fast growing businesses get in trouble is to try and do too much with their limited resources. While this may help them grow even faster, it can also lead to a need for outside capital to support this growth. In such cases, the company’s initial mission is often well within its means, but adding on additional tasks and objectives results in the mission creeping ever larger until the company finds it difficult to accomplish everything it has on its plate.
If your business becomes dependent on outside capital, it can present you with the choice of taking money from sources that don’t necessarily support your vision, or drastically cutting back your growth plans. By sticking to your core business and avoiding business mission creeps, you improve your chances of growing the business using organic cash flow.
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