Traditionally, small businesses sought to grow the organization through additional advertising or company mergers. These tried-and-true methods have been popular because of the immediate results from the actions. However, recently, our business plan writers have found that an increasing number of small businesses are seeking to grow their company through restructuring. The objective of this discussion is to examine actions that a small business owner may take to grow their company through restructuring actions.
What is restructuring growth?
Restructuring growth is when a small business owner examines and optimizes their business models to improve profits or increase capacity for growth. In relations to growth through improved profits, an excellent example of this practice would be when a restaurant owner embraces innovation. Innovation may be through the use of high-end point-of-sale systems or improved efficiency dishwashers. When these actions are taken, inevitably, the small business owner will need less employees. The result is, after the breakeven point is reached, improve profits for the owner.
How to Grow a Business by Increasing Capacity?
When small business owners attempt to increase capacity for growth, this action is often cost prohibitive. To illustrate this, just recently, a local restaurant in my area redesigned their layout to include a drive-through. Keep in mind; the business kept the same location they just redesigned their layout. As you can imagine, the price for the remodel was probably close to $100,000. However, they also substantially increase their capacity for service through a whole new revenue stream.
Small business owners tend to rely on traditional methods for growth. However, innovative entrepreneurs are often able to exploit growth opportunities through restructuring the use of the current resources.
Author: Paul Borosky, Doctoral Candidate, MBA., Author