How to set your business up for long-term growth
As a business owner, it’s easy to get so caught up in the day-to-day operations of your company that you neglect to plan for long-term growth. After all, it takes time and energy to manage payroll, customer orders, inventory, and cash flow. Hustling is part of the job, but constant hustle without a defined strategy can only take you so far.
That’s why it’s crucial to begin laying a foundation for long-term growth now. Taking the right steps can lead to greater customer loyalty, higher profits, more stability, and less stress.
Michael Parnell, a Funding Circle borrower and the owner of construction management company MP Consulting Services, LLC, understands the importance of planning for long-term growth. His company, which he founded in 2012, has already appeared twice on the Inc. 5000 list, a prestigious roundup of the country’s fastest-growing private companies.
To learn from Parnell’s success, we asked him to tell us about the steps he’s taken to ensure his business continues to improve and thrive. Keep reading to discover the six strategies that helped him grow his business long-term — and how you can apply them to your own operation.
1. Hire with a plan.
Hiring smart, capable workers is one of the most effective ways to grow your business. Not all roles are equal, though, so it’s important to be strategic. Instead of hiring to meet an immediate short-term need, Parnell recommended adopting a long-term view.
Start by considering your biggest challenges as a business owner. Are you strapped for time? Or too bogged down in paperwork to engage with clients? Next, think about what type of role could help solve your problems.
For Parnell, who was handling his company’s payroll, order processing, and contracts, that role was an administrative manager. Hiring someone to take over these tasks freed him up to focus on sales and client interaction.
“I feel like the quality level has come up in our business,” Parnell said. Because he had more time to dedicate to strategy meetings, training, and interviewing, he was also able to create a pipeline of pre-vetted candidates he could turn to for future hiring needs.
Another part of a thoughtful hiring plan includes a thorough training program. “We train people pretty extensively on how we want them to manage their projects and their clients,” Parnell said. Every quarter, he explained, his company conducts an all-day training session on a different topic like project management, time management, or productivity.
Holding regular training sessions helps keep employees engaged, improves efficiency on both the individual and company level, and reduces turnover.
2. Cultivate good relationships with clients and customers.
Developing good relationships with your clients and customers is key to generating continuous business. Parnell said his open-book approach with clients helps him build trust.
“We show all our numbers and we are on the same team right from day one,” he said. He takes a collaborative approach to creating a contract, working directly with clients to price out the project so they understand everything and feel comfortable with both the budget and design details.
“Right from the get-go — from budgeting to contract level to construction level — you’re working as a team. You’re an extension of the client,” Parnell said.
Indeed, collaboration and transparency go a long way toward improving client satisfaction and loyalty. “Our clients become our biggest supporters and fans and salesforce out there,” Parnell said. As a result, a whopping 99% of MP Consulting’s new work comes from client referrals, he said.
3. Take care of your employees.
It’s easy to look outward when measuring your business’ success, but your employees are the engine that keeps the machine running. An investment in their happiness is an investment in the health and longevity of your business. When employees are satisfied at work, they’re more likely to be engaged and productive.
But how do you keep them satisfied? In addition to competitive salaries and benefits like health insurance and 401(k)s, employees also appreciate flexibility. According to Clutch, 41% of workers said they valued flexible working hours over any other job perk.
Parnell encourages his employees to maintain a healthy work-life balance. “That’s one of our cultural mainstays,” he said. If an employee needs to leave work early for a doctor’s appointment or kid’s soccer game, they can. As long as they get their work done, he said, “we give our employees that leeway, that flexibility to manage themselves.”
Another way to keep employees happy is by offering personal growth opportunities. When employees commit to working for you, Parnell said, you should also commit to helping them not just professionally, but personally as well. He recently sent a few employees to a personal development seminar and plans to do it more often.
You may not be able to compete with the biggest companies in your industry in terms of salary, Parnell said, but offering benefits that are both practical and meaningful can help retain top employees.
4. Diversify your portfolio.
Focusing on a particular industry may lead to consistent business, but it’s important to diversify your portfolio to the extent that you can. Parnell said “diversification in market sectors and project types and clients” is key to protecting your business against an economic downturn. Plus, taking on different projects is a surefire way to challenge yourself and gain new skills.
If you can, try to secure work in a market that’s less likely to have slow seasons, Parnell said. That’s why he and his company worked hard to break into the healthcare and higher education construction markets — two sectors that are typically more stable. Sticking to one niche, like residential construction, could limit your earning potential. “If nobody’s getting construction loans anymore to build homes,” Parnell said, “there is 80% of our market and 80% of our staff gone.”
Regardless of your industry — whether you own a catering business or marketing agency — diversifying your portfolio can help increase your working capital and open doors for new opportunities.
5. Work smarter, not harder.
As a business owner, it’s crucial to figure out how to guarantee steady business without overloading your schedule. That could involve setting boundaries with clients, aiming for higher-paying work, or rethinking your output and ROI on projects. “It is about allocating your resources where they can bring you the best return,” said Parnell.
“The way I’m trying to grow the business,” he explained, “is by taking on a smaller quantity of projects but larger contract volume.” That requires saying no to smaller projects that may keep the company busy but typically require more rushing and use just as many resources. “A $2 million project that’s 12 months long takes us as much work as a $100,000 project that’s going to be a month and a half or two months long,” he said.
Taking on fewer, higher-paying projects means you can be choosier with your time and money. You might be able to increase employee vacation time, for example, or pour extra funds into an investment. Having a lower number of projects, Parnell said, “gives us more flexibility to make moves when the opportunity arises.”
6. Look into financing.
A little extra working capital can help propel you toward long-term growth. You might need help to relocate your business, for example, renovate your storefront, or hire an inventory manager.
Even if you don’t have a particular growth project in mind, simply freeing up your cash flow can give you peace of mind. Applying for a small business loan gave Parnell and his company more flexibility and security. “Now decisions are made based on long-term need,” he said, “not short term requirement.”
Preparing your business for long-term growth is essential. In addition to setting aside time to strategize, consider looking into your financing options. If you think a Funding Circle term loan might help your business thrive, apply today or see how we compare to other lenders.