Tips for Pacing Business Growth for Sustainability
“Growth is never by mere chance; it is the result of forces working together” – (James Cash Penney, Founder of JCPenney)
Every business decision carries profound consequences for the enduring existence of the organisation, and this is no more true than when it is applied to those decisions affecting business growth. Knowing how and when to expand, open new branches, roll out new features or engineer new products takes planning and is not something leaders should be trying to do by the seat of their pants in response to external events. A meticulously crafted business growth strategy is therefore essential to plotting sustainable growth. Here are the things you will need to consider when constructing yours.
Set clear targets
You know you want to be successful, but do you know what that success looks like? Just how much money do you want to make? What do you want the lifestyles of your employees and yourself to be like? What kind of turnover and profit would you consider to be successful? What would you like your reputation in the industry to be? If you haven’t considered the destination for your journey, how will you ever plot how to get there?
Talk to customers
You probably already realise the value of getting expert advice. Speaking to accountants about your finances, or lawyers about contracting just makes sense. But perhaps you have not considered that no one knows your customer’s needs quite like your customers? When choosing which customers to speak to, first look to those who are your ideal customers – those people who are getting good value from your services and who are happy with your products. By speaking to them, you will slowly uncover patterns for what you are doing right and what a successful business in your industry looks like.
The next step is to speak to those customers who are not happy with your service and find out why. This will help you to uncover the opportunities you are missing, and the things you need to fix to get yourself onto the right growth path.
Don’t ask these customers what you should be doing though, as changing everything based on the impressions of a few disgruntled clients is a sure-fire way to failure. Rather ask them what the challenge was that they came to you to fix, why they came to you specifically, and then what they were feeling at each stage of their journey. Once again, it is about uncovering patterns, and by asking these sorts of questions you will quickly work out whether you did something wrong, whether your services lack potential solutions the industry might need or whether you were simply the wrong fit all along.
Now that you know what a successful client interaction looks like, and where your business is falling short, it becomes easier to see which holes will need to be plugged and where you can comfortably expand over the coming years.
Build a road map
Now that you know where you want to be, and the things that will help you to get there, the next step is to set targets within your company to move things in that direction. With your long-term goal already established, and the information you have on hand it is now easier to start breaking that long term goal into short term targets. How many people do you need to hire this year to ensure they are trained for where you want to be five years from now? How soon should your factory be upgraded to take advantage of missed opportunities? What must marketing look like now, for your customers to all know about you five years in the future?
Of course, cash flow and profitability are all going to play a part in what can be achieved now and what will have to wait. Your accountant will be able to help you prioritise your expenses, and make sure you get the most out of your investments without risking your cash flow and the related ability to meet financial obligations.
Now is also the time to institute your company KPIs (Key Performance Indicators) and get everyone singing from the same hymn sheet. Your profit needs to grow steadily year-on-year if you want to make the big long-term target, so breaking it down into manageable bite size chunks is critical. Remember to also consistently track client satisfaction, revenue per client, client retention, and employee satisfaction. KPIs help you identify what tactics are working and which aren’t, so you can make adjustments to your strategy and achieve your goals.
Plan for disruptions
Before you reach your goals there are going to be setbacks. Whether its key staff leaving, new competition entering the market or surprising new developments, these disruptions are going to slow down your growth. To make sure that the impact of these is lessened it is critical that you think about diversifying your income streams to mitigate high concentration areas or reliance on one client. You should also pinpoint succession candidates for your key positions and begin training now to ensure they are ready when the time comes for them to step into a departing employee’s shoes. Try to picture which disruptions might hit the business the hardest and start threading the solutions into your targets and growth plans to ensure that when they do arrive, you are ready.
Stick to the plan
While many believe that being scrappy, flexible and prepared to change the whole business on a dime is the best path to success, history proves that long term growth instead comes from having a properly constructed plan that takes into account all aspects, including possible future disruptions, and then sticking to it. At times you may be tempted to deviate heavily from the plan, but if you are matching KPIs and growing the business, do not give in easily. Don’t make decisions on a whim and rather apply yourself to the plan, making smaller adjustments along the way as necessary. After all, you made the plan for a reason.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.