For many entrepreneurs, growing a business can be like playing a game of whack-a-mole.
With so many growth strategies at your disposal, how do you know which ones to prioritize? According to a recent study from insurance and human resources company Tag Employer Services, the No. 1 obstacle restricting business growth at midsize companies is "creating greater efficiency."
Tag surveyed more than 420 executives at U.S. businesses with between 20 and 200 employees. One-third of respondents cited greater efficiency as the main challenge during the year ahead, while 31 percent chose "attracting new customers" and 23 percent selected "growing market share."
So how can business owners create more efficiencies at their companies?
Here are three areas entrepreneurs should focus on to cut costs during the year ahead.
1. Reduce back-office hiring.
When companies grow, they typically respond by automatically adding new staff. Roughly 70 percent of survey respondents said they're adding people in back office operations to manage growth. "Rather than stepping back and asking if there are enabling technologies or processes [to manage growth], they just add people," says Tag CEO Joe Johnson. In many cases, changing processes will be a more cost-effective way to manage growth than adding new hires.
2. Rethink custom orders.
Accepting custom orders is something many small businesses do despite the fact that manufacturing non-standard items almost always costs more than original estimates. Particularly during a recession, companies will establish a habit of taking on any business they can, according to Johnson. "There's always a sense with emerging companies that no business is bad business," he says. "They need to be more selective."
3. Train first-line managers.
When small businesses need new first-line managers, many will promote from within, even if the best internal candidates lack the usual qualifications. "I've found that most first-line managers really don't understand the long term business strategy," Johnson says. Giving newly appointed managers more training now will save you time and money in the long run.