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Starting any business comes with an element of risk – some, perhaps, more than others. But, as they say, no guts, no glory.
And as we know, this doesn’t change once a business is up and running. With every opportunity that arises to take a business to the next level, clouds of risk are nearby.
So, when do you take the leap? How quick should the jump be? What form of due diligence should you perform beforehand?
Gautam Sahgal, CEO, Perkbox
There are many reasons for ramping up your growth. For startups, the primary driver is that if you aren’t growing, your competitors are. But growth without a plan can be just as dangerous as not growing at all.
The ideal time to grow should be when you know exactly where you are heading, and what roles you will need to take the business to the next level. You can only have action once you have that clarity of purpose.
Having a clear plan also helps mitigate the innate risks that hamper growth, such as making a misstep in hiring or changing market conditions.
Luke Blincoe, CEO, ReAmped Energy
When you’re a start-up or SME, it’s simple: you need to grow to achieve scale and stop the cash burn. However, when you ‘choose’ to grow or how fast you grow is a much trickier question.
At ReAmped Energy, the right time for our business to grow is when we can balance new customer demand with our internal systems and processes. Growing faster, for us at least, generally costs more per customer as we need to engage more expensive channels within our business model.
You also need to consider how you can continue to deliver the same customer experience that people expect from your brand as you grow. For us, this means making sure our business model is scalable. Otherwise, you can risk ‘winning’ customers only to disappoint them as you may not meet their expectations.
The ‘right’ time to grow is a trade-off on the cost for your business to grow and the ability to continue to deliver the same incredible customer experience that ultimately enhances your brand.
Dhruv Kohli, Head of Growth and International Expansion, Grabox Kitchens
For me it’s all about building a strategy map to balance risks & opportunities. With every opportunity that we come across, there is risk associated with it, but I always try to calculate the risk factor and build a risk mitigation strategy before taking on that opportunity.
Being a numbers guy, I always do a graphical representation of the risks & opportunity; rating the risks and opportunity on a scale from 0 to 10. If my opportunity graph is more upward than risk, it’s a sign that opportunity is good enough to proceed with.
At the end I always work on this principle of high risk vs high return, but being an entrepreneur that builds risk mitigation strategy, calculates the risk factor and the opportunity cost, helps me balance both business risks and opportunities to ensure we, as a team, grow exponentially fast.
Edward Wiley, Director of Strategic Partnerships Ecommerce, OFX
While the ‘right’ time differs, there are multiple considerations when expanding overseas: Assess business performance and competition; demand ebbs and flows; whether international markets will diversify risk; and if upscaling will help to negotiate lower production costs.
Then consider if your business infrastructure enables growth. Is there budget allocated for expansion? Are international partners required? Does your financial strategy incorporate solutions like a Global Currency Account or Forward Contracts to help avoid unnecessary FX costs?
We’re seeing from OFX data that Forward Contract usage by Australian online sellers increased by 23% during March’20-February’21 compared to the previous year, which encouragingly indicates businesses are aware of the risks involved with cross-border trade and acting to minimise FX exposure, by securing exchange rates over an extended 12-month period for cash-flow certainty.
If you understand these factors and leverage robust risk management strategies, you’re well placed to take your business global.
Kate Save, CEO & Co-Founder, Be Fit Food
There is never a right time to stop thinking about growth. Business is always about finding strategic growth opportunities.
I believe if you stand still in business, you’re effectively ‘’shrinking’’
as competitors begin to take over your market share. The goal should be to continuously evolve with the market and to listen carefully to your customers’ needs so that you remain top of mind,
because if you fail to meet their needs, your business will no longer exist one day.
Chris Bromhead, General Counsel & Chief Risk Officer, WLTH
Risk-taking is an essential part of business, yet by nature, most business leaders are risk-averse.
Business growth is predicated upon an understanding of how much risk the business is willing to take, and how it plans to balance such risks with the opportunity to succeed.
Continual changes in a company’s external environment, strategy, and performance all continually impact the risk appetite for a company. Through continual revision and planning from the senior team, businesses are able to assess and make informed decisions based on how the business is positioned, and what is deemed to be the best way forward.
Boldness and innovation, while essential ingredients to success, bring with them new risks which need to be identified, assessed, and managed in a way that complements, rather than thwarts, business growth.
Stephen Barnes, Principal, Byronvale Advisors
There is no real business opportunity without risk. Serious entrepreneurs know that, but too many “wannabes” still fall for that elusive dream of a get-rich-quick scheme with no risk. So, it is all about
how you identify, assess, and evaluate the risk and the opportunity.
Some tips are:
– By focusing on the downside of risk, companies can overlook opportunities that provide significant possibilities for organisational innovation and new competitive advantage.
– Assessing, and potentially altering, the organisation’s risk appetite is a first step in managing opportunities related to risk. A company’s risk appetite is influenced by its culture and changes over time.
– Evaluate opportunities that have been identified as both aligned with corporate strategy and viable within the organisation’s structure. This can include expected profits, expected value
added (profits minus the cost of capital involved in developing and running the opportunity project), or common measures such as ROI.
– Growing businesses can get into financial difficulty too and quickly. Make sure your business structure, funding, processes, funding, skills, and advice is ‘fit for purpose’. As a business
grows, these areas evolve too.
Andy Graham, Director, Business Advisory, RSM Australia
Growth is finally back on the agenda. Determining when to grow depends on the organisation’s risk appetite, understanding of the market opportunities, and capacity to invest.
All growth is cash hungry as well as resource intensive. This means businesses need to have a clear picture of whether they have the necessary resources, including capacity, capability, and cash, to facilitate growth. Businesses that fail to grow in the long term are unlikely to remain viable, so growth of some kind is essential.
Business owners need to balance the risks against return on investment over an acceptable payback period. They should prepare a clear growth plan detailing the opportunities, risks, capacity, and capability, as well as how the growth will be funded. Understanding the implications for growth is crucial, because only then can business owners make an informed and strategic decision about how to proceed.
Ian Yip, CEO, Avertro
The right time to grow is now. The question businesses need to ask is, “By how much?” Leaders should always be working on growth and remain ready to take the steps required as needed. Taking advantage of opportunity typically requires investment and taking on more risk, usually in the form of potentially wasted capital, as well as shortening the business’ runway.
At Avertro, we are currently working on our international expansion efforts, which requires us to balance exactly this risk with the opportunity that is introduced through successfully executing on our global strategy.
Ultimately, good business is about taking the right measured risks for additional growth. The key is to ensure it is done within your risk appetite, keeping focused on your goals, ensuring you remain on task, and being agile enough to adapt quickly as the situation changes.