NEW YORK – Every small business wants to grow. Whether they have aspirations of becoming national chains or simply aim to become well-known neighborhood fixtures, entrepreneurs hope to see their fledgling companies expand. But what does that growth look like, and how can it be achieved on a small business budget?
Yesterday (Sept. 16) in New York City, American Express OPEN hosted a panel to reveal the results of its first Small Business Growth Pulse, a survey of 1,000 small businesses with at least $250,000 in annual revenues about how they're growing their operations. Nearly three-quarters of survey respondents said growth is their top priority, with 63 percent of all business owners favoring a calculated, "slow and steady" approach.
While 65 percent of those surveyed have a formal plan for growth, they said they don't necessarily think it will be easy to accomplish: About half of business owners cite generating ideas for growth as one of their biggest worries. Another 36 percent said cash-flow issues keep them awake at night, but the majority of survey respondents said they were confident that they can access the funding they need to grow. [6 Secrets for Jump Starting Business Growth]
"Access to working capital becomes critically important as small businesses look to pursue both expected and unexpected opportunities to grow their business," said Janey Whiteside, senior vice president and general manager of customer marketing and relationship management for American Express OPEN. "When considering options to help fund their business, surveyed small business owners reported that low fees and interest are the most important factor, followed by trust and security of the provider and easy access to funds."
According to the survey, the biggest opportunities for small business growth lie in increasing the business's customer base (26 percent), revenue (24 percent) and profit (23 percent). One-third of respondents said expanding into new markets and diversifying their products and services have proven to be growth catalysts as well.
During yesterday's panel, moderator JJ Ramberg, host of MSNBC's "Your Business" and co-founder of charity-driven coupon-search platform Goodshop, noted that growth takes all kinds of forms, but it's often driven by a well-timed opportunity. No two businesses have the exact same experience, so many entrepreneurs (49 percent) will seek out advice from other business owners and experts to help figure out their next move. Ramberg asked three local small business owners about their "growth moments" and what factors helped them get to where they are today.
Jomaree Pinkard, co-founder of Hella Bitters craft cocktail products: Pinkard and his two co-founders started their business out of a home kitchen, where they handcrafted, bottled and labeled small batches of cocktail bitters (flavor extracts typically mixed into alcoholic beverages). Pinkard told the panel that the early days of his business were all about proof of concept: The team took no income, instead reinvesting any profits into making bigger batches of its products and marketing them to more stores. Some large, unexpected orders, including one from retailer West Elm, forced Hella Bitters to scale up quickly. In the course of a few months, the small company had moved to a new location and purchased new equipment to accommodate the increased volume.
Pinkard's advice on choosing your opportunities: "You have to understand who you are — your team, your capabilities, what you can accomplish — and your brand identity. You need to understand those two dynamics to know what opportunities you can engage in and what you have to say no to."
Leo Kremer, co-owner of Dos Toros taqueria: Kremer and his brother bootstrapped their first taco shop, and in the beginning, they experienced the rate of growth they were anticipating, serving about 200 to 300 customers per day. In 2010, a glowing New York Times review changed everything for the brothers. Almost immediately after the review was published, Dos Tacos saw customer numbers triple, and the company soon brought investors on board and secured a Small Business Administration loan to expand. Today, handling a lot of foot traffic is no sweat for Kremer and his team — Dos Tacos is about to open its ninth New York City location — but he described the sudden growth spurt the restaurant experienced as "the best kind of challenge."
Kremer's advice on getting a business loan: "There are more lenders than you think there are. Talk to regional players [instead of big banks]. They know the community better, and maybe they've been [to your store]. They do want to fund your business."
Tania Yuki, founder and CEO of social media intelligence company Shareablee: When Yuki quit her job to start her business, the company was essentially her and her computer in her living room, dreaming up a solution to help businesses keep better tabs on their social media insights. She began showing her preliminary work to marketers, and one of them offered to buy her solution if it would be ready by a certain time. In the scramble to hire people and finish her minimum viable product (MVP), Yuki learned that she needed to invest well ahead of the growth she was seeing. Though she admitted she still sometimes feels like she's playing catch-up, she said she has learned to find the right balance of spending and planning for future expansion.
Yuki's advice on learning to let go as you grow: "Scrappiness is important. [Entrepreneurs] struggle with how to keep that scrappiness and urgency, that feeling that everything, every customer, every product decision matters. You do have to let go of some of that ... to get to the next level. As a leader, [you] have to keep making these value decisions. Should I spend my time helping with this thing or let the team figure it out?"
For more inspiring stories and advice from real small business owners, visit the American Express OPEN Forum website.