Not every small business wants to grow fast, but the ones that do usually have an ingenious spark that propels growth. That inventiveness might come in discovering a new market, targeting a customer niche or finding a new solution to a business obstacle. Without a creative advantage, many businesses may just be dreaming about growth.
But breaking new ground alone is not enough. Great business ideas don’t equal great businesses. Businesses take calculated risks to build their advantage, and the fastest growing businesses experience more cash crises than others.1 Bold risks may be what turns ideas into actions, but be prepared for bumps along the way.
What is your business’s edge?
Ingenuity often drives competitive advantages that lead to higher growth, profits and returns on investments. While an element of inspiration helps at every stage of business life, it is especially important to small businesses who can’t match larger competitors’ breadth of resources. It is up to you as owner to find the source or your business’s originality and build on it.
Small business owners typically find a creative edge in:
- Tapping into niches with product bundling or special servicing - Small businesses can often thrive in the market pockets where large business can’t easily go. That means seeing opportunities that others don’t and serving customers with a deeper understanding of their needs. Marketing to profitable niches is the top investment for small businesses in 2019.1
- New products, services and technology - The fastest growing businesses are three times more likely to enter entirely new lines of business.1 Sometimes that comes from developing new technologies or services, but it can often come from partnering to access an innovation, or building sales and services to distribute a new offering.
- Market expansion - Offering a successful product to more potential customers presents one of the greatest sales opportunities. The fastest growing companies are twice as likely to expand into new markets, and 42 percent more likely to add a global partner to expand.1
- Low cost positioning – By carefully controlling spending, some owners learn to accomplish much with few resources. That gives them a natural cost advantage in the market. These small businesses can then undercut larger organizations on price and prove themselves with customers.
Manage risks and resources
Small business owners need to be good at seizing opportunities, but they must be great at anticipating risks. Risks can bring down a business before its promise can take hold.
Fast-growth companies take bold risks to exploit their advantages. Those risks mean they are 25 percent more likely to experience a cash crisis that can wipe out gains for the business and the owner.1
To confidently take on the risks that come with being bold:
- Assess the risks -Understand what can happen to the economy and the market for your products. Evaluate the executional risks that you bear, whether from a non-performing hire, a product that doesn’t sell according to plan or the loss of a key customer.
- Line up resources to cover losses and backup plans - Financial resources are the best way to cover risks. If something goes wrong, they provide the liquidity to react quickly. Cash reserves can protect you from digging into owner personal wealth if a cash crisis occurs. Insurance for liability, fraud, business interruption, etc., can addresses specific threats and add another line of defense.
- Share the risks - Partners and contractors can bring skills, labor and sales to your business. While partner companies can extend your team, they can also share risks that come with ingenuity and growth. That means less risk for your business and for you as the owner.