Business mentor: Achieve business growth through self-examination

Q. I want to grow my small business more rapidly. Do I need to be more entrepreneurial to stimulate growth?

A. Julian Kroll, business development adviser with Industry New Zealand, the national economic development agency, replies:

There are many similarities between most small businesses and entrepreneurial efforts.

They both start from small beginnings and require much effort and risk-taking on the part of the founders.

But risk-taking does not mean carelessness. Entrepreneurs have an appetite for risk but are focused on their end goal. It's just that their risk appetite is higher than that of the average businessperson.

So, as a first step, look at the degree of risk you can stand - that is, risk in the key functional areas in your business (sales, marketing, operations, product development and finance)

More than 85 per cent of all businesses in New Zealand employ fewer than six people, so New Zealand is a nation of small businesses. Small businesses and entrepreneurs stimulate the economy through job creation. Both groups start with limited resources but entrepreneurs are effective at harnessing limited resources for economic gain.

Look around at your customers and see if you can identify individuals who call upon your services to develop their products.

Look for customers who don't fit your typical customer profile. Does this represent an opportunity for your business?

Often when a new product or service is developed unexpected approaches from new customers can lead to larger opportunities than just your original target. Does this represent an opportunity for your business to morph and grow in another way?

There are some traditional ways to extract increased margins out of your business and they revolve round process innovation, while entrepreneurs are typically involved in product innovation.

Process innovation could allow you to produce the same product at the same price but of a better quality, creating a point of difference from your competition. Do you have any intellectual property that can become part of a product development programme?

The capacity to develop productivity improvements allows the entrepreneur's business to grow quickly. When was the last time your business looked inward to see if your production processes are still as effective as they could be, or that your supplier relationships are the best you can obtain?

In doing this you may get into an internal resource war, tugging you away from your production and focusing you on your processes. It is sometimes necessary to pull a process apart to build a stronger model for growth. Adding on appendages can make the business unstable.

This is just the tip of the iceberg in terms of areas that may help you to become a high-growth business.

If by doing this you find potential for improvement, your next step may be to seek external support. This would pay dividends in the long run, with increased margins and output.

I will leave you with this thought: the difference between an inventor and an entrepreneur is that the entrepreneur knows how to harness the opportunity for profitable gain.

Whether you are a small business operator or a true entrepreneur, you still want to maximise the return on the effort you put in.

* Contact Julian Kroll on (09) 9199003, email julian.kroll@industrynz.govt.nz

Industry NZ

* Send Mentor questions to: ellen_read@nzherald.co.nz. Answers will be provided by Business in the Community's Business Mentor Programme.