I’m a small business owner and although my company is growing rapidly, I am working on developing a comprehensive strategic growth plan as our goal is to expand our business into the entire Southeast region within 3 years.
I have recently completed (updated) my company’s ‘business model’ and am now working on the cost-profit model as it relates to my developed business model. I’m also working on documenting my company’s core processes in an effort to standardize our work and to serve as a training tool for future employees. My question is, are there any pitfalls or drawbacks to developing my cost-profit model at the same time I’m documenting our core processes? If so, which should I do first or which one is more important?
– Andrew R. (March 13, 2016)
Andrew, thanks for your question. First, let me say that the cost model (or cost-profit model as you referred to it) and documenting your company’s core processes are both critical components to developing and achieving a successful strategic growth plan like what you described.
Kudos to you as a business owner, as our small business consultants routinely see business owners or leadership teams with grand visions of what they want their company to become, however they’re lacking the key components to building and implementing a successful plan for business growth. The analogy we use with our clients is that you can’t build a large building (prosperous business) without first establishing a strong foundation from which to build it.
Otherwise, the structure will continue to collapse around you, every time you start building it higher and putting more stress and strain on it. The same analogy is true for trying to grow or expand a business without having the core pieces in-place with which to build from. So with all that said, our firm would recommend that you complete your cost-profit model BEFORE you begin tackling the documentation of your core processes. Our recommendation is based on the fact that you may need to tweak or refine a few of your core business processes based on the output or knowledge gained from your completed cost model (cost-profit model). Our analogy is: You don’t tighten down all the lugs on a wheel until you’re sure the wheel is on straight. We hope you find this information to be helpful to you and your company and appreciate you reaching out to us. If you reach a stumbling block or need additional assistance, please feel free to contact us to schedule a FREE initial consultation with an Affirm Consulting small business expert.