It’s 2020, the start of a new decade and you’re ready to make it yours!
You’ve spent the past few years establishing your manufacturing business, your clients are placing regular orders, your product is selling, and you can’t keep up with demand.
Now it’s time to take things to the next level and you’ve spent your festive season thinking of ways you can improve efficiency, reduce your production cost, increase volumes and ultimately generate profits that you’re proud of.
So you’ve done the dreaming, what now?
These 9 steps will help you to reach your growth dreams:
1. Be prepared
1.1. Business viability – do a sanity check on whether your business is (or can be) ready for growth by asking these questions:
• Do you have access to increase sales and demand for your product?
• Do you have good relationships with your (prospective) clients so that this demand can be validated by them?
• Do you have the right people in your business (internally or as contractors) to drive growth sales, business development, financial management and operations?
1.2. Compliance – if you don’t have your ducks in a row yet, appoint the relevant professionals (accountants, lawyers and others) to ensure that you’re compliant with all the statutory requirements you’ll need in order to apply for finance.
Zahra, my business partner, took listeners on TalkWithRams through the 3 most important aspects of raising growth and expansion finance.
Think of all the things you’d like to improve and invest in and write them down.
Think of the new production line to increase capacity or replace an inefficient machine, the automation add-on, the energy efficiency technology or solar PV solution. Think of the efficiencies you can drive with additional forklifts or improved storage racking facilities. Think of the new process flow and floor plan that will ensure consistent quality, and the equipment that goes into a quality control lab so that you can ensure the best quality product to your clients. Think of the cold storage and additional delivery vehicles and the ERP system to manage the whole operation. Think of the ISO accreditation or the quality assurance that will allow you to penetrate a new market with high barriers to entry.
3. Cost and Plan
Take all the dreaming and start planning how to execute, obtain quotations and build a CAPEX wish list so that you know how much you’ll need.
4. Work out the feasibility of your dream
Ask yourself if you can get your customers (existing or new) to show their interest for at least 80% of the capacity of the machines and equipment that you intend investing in.
If you’re unsure about whether you can build up the demand – undertake a market study or feasibility to figure this out.
5. Do a sanity check
Test your thinking and feasibility with peers who have grown their own businesses, your business advisors, coaches and mentors.
6. Work out the detail
Build out a detailed bankable plan that outlines the market, technical, financial and legal aspects needed to provide the right investors and financiers with the comfort they need, that your plan is achievable and should be financed.
7. Finance the growth
Identify the right financiers for your growth; based on the stage of growth, how much you need, their requirements (e.g. securities) and your ability to provide them with these requirements.
8. Implement the growth
You’ve raised the finance and now you can start the process of ordering, installing and commissioning your new capacity while growing your order book and collecting the cash to repay your financiers.
9. Look back and be proud
Depending on how ready you are, we typically see this being a 1 to 3-year process. Growth is exciting, challenging and demanding, but you’ll look back and be proud of the process and be even prouder that you’ve achieved your 2020 dream.