Picture this – you’ve started a successful physiotherapy practice a few years ago and the business has really taken off. From your original one-man-show, you’ve spread your wings and established six practices, covering the better part of your county, employing a noteworthy 21 practitioners and seven back office staff. Your revenue, which once stood at £3,500 per month, has grown to over £30,000 per month and you’re incredibly busy. However, despite your quickly increasing income, your profit margin has stayed the same.
What do you do?
The temptation in this situation is to simply continue working incredibly hard, hoping that eventually everything will level out and you’ll start to see your profits rise in the way you hope. Unfortunately, this doesn’t often happen, and you can find yourself caught in a cycle of tail-chasing that will quickly wear you down.
The important fact to learn here is that rapid cycles of growth can carry rapid bursts of cost. Regardless of your earnings, if you don’t have your costs under control, your profits will stall, and you’ll be working all hours of the day just to stand still.
The fast track to standstill
The most common mistake for ambitious business owners who find themselves at the centre of very fast-growing enterprises, is a lack of preparation for what that growth will actually mean.
Brisk expansion entails a major uptick of responsibility and activity. Six new practices need to be managed so hypothetically you might have employed a practice manager, and a general manager to oversee them all. Sounds logical, but before you know it, your small business has become an expensive four-tier hierarchical structure.
As businesses grow, they can easily lose agility. Profits must be reabsorbed to pay salaries and rent on larger premises, reducing liquidity, complicating communication flows and adding layers of authority to decision making.
The good news is that with a bit of forward planning, this hurtling towards a standstill can be avoided.
Setting yourself on a path to sustainable, profitable growth
Setting yourself achievable short-term goals, both personally and on a business level, is the starting point. Do you see yourself at the golf course every day after work, or putting in extra hours to grow your practice and sell it at its maximum profit? Both are viable, aspirational goals, but each will require a very different revenue plan.
Try to consider various options, ranging from low to high-risk alternatives, and translate these into financial terms (e.g. based on a revenue today of £500,000, achieving £200,000 profit in five years’ time will require a very different growth plan from that required to achieve £200,000 profit in 2 years).
Picking your revenue goal will dictate your capacity targets. Will you need more rooms or practices? Increased number of clinicians? Extended operating hours? A new range of stock? Whatever you decide, your new expanded operation has to operate at maximum capacity, to offset the increased costs associated with growth.
Perhaps the easiest way to manage growth is to take the overall revenue target (e.g. £200,000) and divide it into a few subprojects (e.g. five subprojects of £40,000 each). Examples of these could be extending the client journey, cross selling, as well as surgeon and consultant networking. Then work through each one to establish realistic revenue goals and also how easy or hard each one is compared to the other. Completing this exercise will quickly enable you to see what are the realistic set of projects that are going to make a real difference for your practice.
How do you know which growth tasks will work?
A common issue facing owners of small businesses is not knowing which activities will actually benefit their businesses and which will be a waste of time.
When you’re up against a hectic schedule, every spare moment counts. If you’re going to sacrifice time with the family or riding your bike to put in some extra hours at work, you want to know you’re spending those hours on tasks that will make a difference.
Once again, setting goals is the key. The most effective way to do this is to make sure your goals are SMART:
- Specific: What are you going to do? Who is involved and what is the process?
- Measurable: Set a metric target such as signing up 5 new clients
- Attainable: Your goals should be realistic and possible for your team to reach
- Relevant: Your goal should matter to your business and address a core initiative
- Timely: You should set an end date by which time you want to reach your goal
If you want to try something new, it’s vital you test it to see if it works and that means setting parameters that allow you to measure success.
Understand what software you need to support your growth
Any serious business today needs some kind of software to help manage daily operational tasks, appointments, invoices and contacts. The key is to invest at the right level and to know when you need to upgrade.
There is no point in spending a fortune on an enterprise level platform, when your small business can only use 15% of its functionality. By the same token, spreadsheets and word documents are not going to cut it for long in a fast-growing business.
Ideally, you’ll be using something that can scale with you. You need a system that will pick up the burden of daily tasks, automate as much as possible and free you up to do other things. Whichever system you choose, one thing is certain: if you’re spending all your time on admin that could be automated, you simple can’t dedicate yourself to the innovative strategies that will drive your business forward.
Stay in control of your growth, profitability and desired outcomes
The only way to stay on top of your growth plans is to document your goals, measure your success and keep looking ahead. It might seem obvious but it’s so easy to get sucked into daily ‘fire-fighting’ that you neglect to look after your future or yourself.
Keep your personal goals in sight. Why did you go into business for yourself? Is your business complementing your lifestyle or taking over your life?
The better run your business, the more sustainable your growth will be. You’ll feel more in control, which means you’ll be happier and this will feed directly into the experience you offer your clients.
Growth is the goal for every business. How fast you grow is up to you. Fast growth is fine if you’re ready for it – but it might be better for your sanity to aim to be the tortoise rather than the hare.