Business mentor: Be prepared to take risks, but carefully

Q. I have a small business, but I want to grow more rapidly. Do I need to act in a more entrepreneurial way to stimulate growth?

A. Most small businesses and entrepreneurial efforts have many similarities.

They start from small beginnings and require a huge amount of effort and risk from the founders.

But "risk taking" does not mean careless regard on the owner's behalf.

Entrepreneurs have an appetite for risk-taking, but are very focused on their end goal.

So as a first step, look at the degree of risk you can stand in the key areas of 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 and this activity is a vital part of the economy.

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

Look for customers who use your services but don't fit your typical customer profile. Is this 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 the original target you had in mind.

There are traditional ways to extract increased margins from your business. These involve process innovation.

One example of process innovation is to produce the same product at the same price but improve quality, creating a point of difference against your competition.

It is the capacity to develop productivity improvements that enables the entrepreneur's business to grow quickly.

When was the last time your business assessed if production processes were still operating at the most effective level or that your supplier relationships were the best that you can obtain in the market?

This whole process means you may get into an internal resource war, tugging you away from your production and focusing you on the process by which you do business.

Sometimes it is necessary to pull a process apart to build a stronger model for growth.

Adding appendages can make the business unstable.

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

As a next step it may be worthwhile seeking external support if you highlight potential for improvement.

This investment would pay dividends in the long run with increased margins and improved output.

I 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 are after the same result, the maximisation of returns for effort.

* Email us your small business question

Answers from Business in the Community's Business Mentor Programme.