The most difficult time for businesses is the first six months (Rumelt, 1974). However, this period may extend to two years or more depending on the type of business. There are many things a business requires during its initial stages.
If the requirements are not met, a business may lose momentum or even collapse. To avoid this, businesses need to know their most crucial needs.
This paper will discuss the requirements of businesses in their third and subsequent years of existence. It will also discuss how a business can ensure growth after the first year of existence.
Businesses need to make an annual plan. This should be in agreement with the initial business plan of the business. A business plan gives an overall road map while an annual plan sets out targets for the current year.
An annual plan serves as a benchmark against which the annual performance is measured. It captures things like targets, goals, objectives and interventions or means of attaining the goals.
Without an annual plan, operations of the business may lack direction. Annual plans are made by management in conjunction with all the departments.
Funding is another requirement of a business in its second year of operation. All operations of a business require funds. Funds enable a business to run its operations smoothly. The money can be obtained from a variety of sources. The source could be either internal or external.
A business that has been in operation for two years may be in a position to generate enough revenue to run its operations. However, in some cases the proprietors may be required to inject more capital into the business.
A business should also comply with all legal requirements. These requirements vary depending on the location of the business. This includes filling and paying taxes. Incompliance can damage the reputation of the company.
Good management is a very important aspect of a business. A business needs to be properly managed for it to move forward. Good management involves proper management of finances, human resource, operations and the supply chain.
Good management is dependent on the availability of good managers. A business should attract and retain people with the desirable skills.
Growth Strategies
There are many strategies that a business in its second year of operation can employ in order to grow. They include excellent marketing, competitive pricing, identifying a niche market/market fragmentation, knowing the competition, and good communication.
Marketing covers all the activities intended to increase the business’s revenue. These activities range from advertising to branding.
A business needs to spend some money on advertisement to popularize both itself and its products. Branding is important to a business because it distinguishes it from its competitors.
Competitive pricing entails pricing of goods and services so that they fall within a certain range. This should be done in such a way that the prices are comparable or better than those of the competitors. However, a company should be careful not to run into financial trouble.
Competitive pricing should be supplemented with excellent customer relations.
A business should identify a niche market and strive to satisfy the needs of that market. This may also include market fragmentation and diversification (Palich, Cardinal and Miller, 2000).
Identification of a niche market enables a business to provide high quality products and services. Fragmentation is a strategy that enables a business to know what each segment of its target population wants.
It is important to know the competition. This information helps the company to set itself apart from the competition. It also helps a business to know its weaknesses.
References
Palich, L., Cardinal, L. and Miller, C. (2000). Curvilinearity in the diversification- performance linkage: An examination of over three decades of research. Strategic Management Journal, 21(2), 155-174.
Rumelt, R. (1974). Strategy, Structure, and Economic Performance. Cambridge, MA: Harvard University Press.