Business Development Strategies for Ontario-based Startups – Year 3

This is the 3rd blog in our 5-part blog series called Setting Benchmarks for Small Businesses. Reading this piece will help you understand where your business performance strategy is performing well.

And you can keep doing what you are doing, and work to spot similar new opportunities), and identify where you have room for improvements. The areas where you are outperforming your competitors are known as your competitive advantages.

Your business development strategies are designed to help you attract more customers to ensure you stay on a success streak.

Conversely speaking, the areas where you are being outperformed by your competitors are known as your business vulnerabilities. If you continue to be outperformed for a long time without remedying the situation, your business can fail to attract and retain enough customers.

In the worst-case scenario, ongoing underperformance can even result in business failure.

The 3rd year of your business is when you will have to make perhaps the most radical form of business development decision for your small business. This decision will impact what all your business development strategies look like.

The decision being, “Do you want to continue growing, or do you want to continue at status quo and use the time you have to do something else“? The other activities could range from growing another business, running for the mayor’s office, or retiring off with your kids, etc. This sole decision will guide where your business goes beyond year 3.

Working with small business in Ontario for over 10 years has helped us identify the following 5 factors that make up an effective business strategy:

1. Decide your management style.
2. Organize responsibilities and information-flow
3. Formalize Business Processes
4. Decide your Primary Business Focus
5. Gauge Business size and your involvement as the Owner

Business Development Strategies for Successful Disengagement

The reason for disengagement can be twofold. Either you want to close yourself or your growth is limited because of some external factors. A franchise owner with limited territorial sales or a business that depends on a slow-growing community is two such examples where external factors limit the business’s growth in year 3.

Management Style

Your business entering its 3rd year of operations is a testament to your leadership style. You already succeeded by getting new clients and hiring/retaining people working for those clients.

The next mountain to move is to train people to be like you. It is impossible to be an expert in every activity going on in your company. Therefore, can you keep people who work in their respective fields of expertise while having them share your business development strategies?

The successful continuation of the status quo is dependent on managers that you train. They must ensure high-quality work for your clients while evolving the business itself. This way your business can retain its competitive edge overtime.

Organization

In the case of disengaging your business from growth, you can retain the organization level where you are at, in the start of year 3. This is usually comprised of a single layer of managers for each department, headed by you directly.

The managers you hire at this stage do not need to be of the highest caliber. Your executive decision to stay at status quo will limit room for their growth anyway. These managers should be capable enough to ensure your cash flow is always maintained at a comfortable level. This will help you prepare for inevitable drought periods.

Formal Processes

You have a basic process in place to ensure your marketing, operations and finances keep running without much interference. It is rare to meet any new business challenge when you are focused on maintaining the status quo.

The processes in place will become more concrete. The best thing at this stage to do is write and record these processes down. Thus, your managers will not have to spend too much time training the new hires. This strategy works best only in disengagement stage.

When you are planning to stay the same, writing down the standard flows becomes a viable training procedure.

Primary Business Focus

Retaining the position of profitable status quo becomes your natural business plan in the 3rd year of business. Now is the time to do whatever else you wanted to do by pausing this business at its current stage. If you want to grow and are limited due to external factors, you can continue with another business that does not have the limitations you are facing.

Business Size and Owner’s Involvement

Because the business is not expanding, its size becomes constant. It is the same size as the business owner itself, speaking in terms of responsibility. Managers can take care of most of the tasks, giving increasingly free time to the business owner. At this stage, the “disconnection” comes into play between you as the owner and the business strategy maintained by your managers.

To ensure the business stays afloat, your time and effort is still needed. Now you will be evolving the business to meet the needs of your customers. Many automobile dealers in the 1970s and 1980s had to fold and declare bankruptcy, or sell at a marginally low price. Because they failed to evolve to the customer’s needs.

Business Development Strategies for Successful Growth

If you choose to grow your small business beyond year 3, you will need to bring in all the resources available together.

This includes the financial resources (profits and the borrowing power of your company) and non-financial means of growth (human resources, company policies). You basically are risking it all for growing even more.

Management Style

This successful-growth stage is also your first attempt at moving the company from being a small business to a profitable corporation. Strategic Business Planning will pay off once you are successful in this transition.

Once in your 4th year, you will be in a full-scale growth phase. If this stage is unsuccessful, there is a solid possibility that you can shift to disengagement stage. Or you can choose to regroup your resources to move to a survival stage prior to declaring bankruptcy or selling the business at a low cost.

Organization

You will hire more people to help you perform the on-hand tasks. Hiring managers with an eye to the company’s future rather than its current condition is important at this stage.

This is especially important because in the next full year, you will be targeting full-fledged growth. Employees managed by one layer of managers would be regulating the operational work. The organization of your business is thus “developing”.

Formal Processes

Your business processes need to be mapped at this stage. Keep an eye out for the change in needs/expectations from your new clients. As you take on more growth, you will have more clients, and your business growth plan should evolve consequently.

You have to update the processes established before this year as well. Thus, your active hiring will not experience a bottle neck as they try to work on existing client’s tasks.

Primary Business Focus

The primary task is to make sure your basic business stays profitable. This way, you will not outrun your source of cash while training managers who can meet the needs of your growing business. Meanwhile, strategic planning is extensive at this stage, and deeply involves the owner. You will be more active in all phases of the company’s affairs than you would have been, in the disengagement aspect.

Business Size and Owner’s Involvement

For the first time, your business will reach a point where you would require someone like you to have active oversight over the whole business. “Crisis of control” is a major barrier we have seen in year 3 while serving as CFO for small businesses in Ontario.

We help them develop solutions to keep everyone in the loop while keeping the whole company agile enough to move forward with a swift pace. This is also the time when having a management and business consultant for your small business makes the most sense. You will have to make decisions that will impact your business long-term.

What next?

Once you have decided what stage are you going to steer the business into as it enters a profitable stage at the start of year 3, the above-given strategies will guide you in aligning your daily operations. If you want to successfully continue the business without expanding it, all that is left to do then is ensure adaptability.

Therefore, you will have more time on your hand to spend on non-business activities. If you choose to grow this small business into a full-scale organization, year 3 should be used to gather as many resources as you can.

These resources will be used for the expected expenses on growth in year 4. You will be much more actively involved in forming the business strategy that gives you the best returns swiftly. You also have to ensure that your current clients stay happy with the quality of your services.

In the next blog, we will discuss where most of the small businesses in Ontario should be in their 4^th year. We will also discuss how you can measure your growth to see if you are growing at an optimal pace.