We all want more business. If your business isn't growing, it is shrinking. Is there a right way? Or a way that is more effective than the others? The answer is yes. But it's never the same answer. Building a cohesive strategy for business growth requires putting focus into the engine the best works for your business.
Getting your head wrapped around these engines allows you to clearly create and promote your strategy.
Fundamentally there are 4 ways to grow your business:
- Improve your offering incrementally to increase revenue and to decrease costs.
- Scale your operations to reach new customers or do more for existing ones.
- Acquire other businesses to build scale and/or capabilities.
- Innovate to create and capture significant new value.
Improvement and scale is all about working with what you have. You must do them both in order to stay in business. Scaling is the best strategy when you have got a proven system that's ready to step on the gas. Most good businesses loop between cycles of improving and scaling. Securing your business needs to happen first to allow for the other two to happen.
A business gains capabilities for growth through either Acquisition or Innovation. Innovation is in house. There is always the risk there will be no return on the investment. Acquisition brings in new capability that would otherwise be inaccessible or has a proven track record of performance (theoretically de-risked).
A balanced strategic plan will contain elements from all 4 categories. However one will always be the primary focus. Let's have a look at each of the 4 categories to examine some strategies and considerations to make when looking for growth.
Improving your business
Make what you have already got constantly better.
The quality of your business will always be a reflection of the quality of the people who run and maintain it. Investing in professional development not only in yourself but for your team is the surest way to drive improvements to your existing business. Couple professional development with increased autonomy for your staff to utilize their newfound knowledge.
Improve the quality of products and services
Customers crave consistency. Giving customers what they expect is key to improving your business through quality. This does not always have to be through expensive experts and complex mathematical formulas. There are some very basic down to earth moves you can make to start ramping up quality today
- Document your process. Everyone has to be working from the same playbook to deliver consistent results.
- Identify the issues. Make a cultural shift to promote problems being brought up to be resolved. Manage the problems with the processes, not the people. Take care to not shoot the messenger advising management of problems they find in the field.
- Always fix for the customer. It is not what happens but how you deal with it that sticks the most in a customer's mind. Respond appropriately towards the satisfaction of the customer.
- Iterate the process to reduce the number of mistakes. With a documented process and a culture of understanding and seeking out issues, it will quickly become clear where improvements can be made. Because you have it documented, focusing on the next moves you need to make to increase quality can be made and communicated.
The most important aspect of business is providing value in the eyes of the customer. If you don't work to continuously add this into your customers lives, your business will falter and degrade. This can be a changing landscape that requires constant re-evaluation. What worked for the customer yesterday isn't always going to work today.
Ask yourself regularly before you take on a new task or release a new product or service:
"What is the value for my customers in this product?"
If you can't think of an ample reason as to why your product or service is of extreme value, then chances are you should go back to the drawing board to plan and recoup some new ideas.
Engaging with your existing customer regularly is important to stay on top of this. Implement regular customer interviews to continue to stay connected to their current and evolving needs.
Who ever knows your customer the best will own them.
Serve over everything
Do you pay more attention to what you think is right rather than what the customer has to say?
The decisions we make need to strike balances between what is good for the customer and what is good for the company. However always err on the side of what is good for the customer. Without them you won't have a company.
If a customer is not satisfied or happy, you must do everything in your power to make that customer happy. Give them what they want. Even if they are wrong, take the initiative to fix things and correct them immediately. Sometimes this means referring them to a competitor.
Be mindful to retain the position in your customer's mind of the company that fixes their problems - rather than ignores or belittles them.
Scaling your business
Do more of the great thing you've already got going on. When you have got something that works, then you need to look at how you can get it out there into more people's hands.
Think big and act bold
When looking to scale you need to start to think big. If the goal isn't a stretch then you are not really trying to scale what you have. Take a good look at where you are now and work out where you want to be. From $5 million to $50 million? 1000 customers to 100,000 customers? Once you have wrapped your head around a goal, stop thinking and start doing. Take bold action on your ideas with the comfort that you've got a solid system underneath you.
Work on the business, not in it.
Scaling your business means coming up for air. Take your head out of the day to day to set your big goals and the structures that promote the implementation in your business.
Establish an Objective / Key Results (OKRs) style system that let you crystallize and communicate direction to everyone. Any employee you connect with in a hallway should know where the company is going and what their part to play is in getting it there.
Build a public profile
People buy from people. This is especially true in the B2B world of selling. If you are the leader of a company, your customers, investors, advisors and partners want to know you. Promote and communicate the faces of your business to help readily build connections with the markets you are looking to enter.
Find And Establish Key Relationships And Networks
Your core competencies and experience is important but it is always about who you know.
What partnerships need to be built to expose your business to the pathways for it to grow?
Grow the team by hiring the right people
To facilitate growth you need to be able to hire ahead of your needs. This gives the business the capacities it needs to seek out and make the changes necessary to execute the strategy. Changing your organizational structure will need to be evaluated as you transition in sizes of scale.
Managing Capital and Financing
Growing from $5 million to $50 million or from $50 million to $500 million will require additional capital in the business. Sustainability in growing the business is important.
Managing cash flow and the finances is critical. Ensure all budgets and reporting are in place to keep track of the affect growing your business has. Look at accounts receivables, managing account payables, inventory best practices and timely invoicing to lock down how cash flow is operating.
Acquiring new businesses
Get something new into the business that has been proven by someone else.
Acquisitions are attractive because the perception is someone else has de-risked the idea. Picking something up that can be Improved and Scaled. But the reality is M&A is hard and they regularly fail to deliver on their goals. Some studies show as high as a 70% - 90% failure rate.)
Be aware of your own liquidity and financial position
The costs of acquiring a business stretch much further than the sale price. Before engaging in M&A activities, you need to be sure that you have access to the appropriate capital. This should cover the entire integration through and what those effects on your existing business may be.
Define your goals and success plan and make sure everyone can see them clearly
Make sure everyone knows why this is happening. What does it mean for the business and what the desired outcomes are. The team you have may not be the most appropriate to execute on a merger. Consider whether specialized staff are required to help navigate the integration issues that will arise of combining companies.
Plan and execute due diligence
You get all the skeletons in the closet - so you need to make sure you do everything you can to find them. Due diligence is also key to understanding and defining strategies for post acquisition. How does the target company's customers think about them now? What will they think about them after a merger?
Keep the 4 C's in mind:
- Compensate: To keep existing management, make targets achievable and compensate appropriately.
- Communicate: People on both sides of the transaction should be completely aware of what's going on. People default in times of uncertainty to assuming the worst
- Care: Reacting well to challenges can make all of the difference in times of great change. Even small inconveniences can create ill feelings. Respond quickly and completely.
- Cull: If you must remove any members of management, make your decisions quickly, but carefully.
Innovating in your business
Making a discontinuous leap to something new. Some paths to innovation include:
Borrow from other industries.
Look at ideas that works elsewhere and apply it in your business.
- Henry Ford brought the idea of the production line working in a meat packing plant to the automobile industry thereby dramatically reducing assembly times and costs.
Ask or watch customers.
Customers love to give you ideas for incremental innovations. Where possible, try just watching them. See how they use your products. Do they use them in new ways? Make your product easier to use, eliminate the current inconveniences and introduce improvements that overcome the complaints.
- Levi Strauss found that customers ripped their jeans – so they created a line of pre-ripped jeans.
- Heinz noticed that people stored their sauce jars upside down so they designed an upside down bottle.
Combine products to make something else.
- Mobile phones with cameras
- Suitcases with wheels
Take something out of your product or service to make it better.
- Dell eliminated the computer store
- Amazon eliminated the bookstore
- iPhone removed the physical keyboard
Check through existing patents that may apply in your field.
- Could some be licensed?
- Can you use a new method on one that is expiring?
- Is there a different way of achieving the essential idea in a patent?
Adapt a product to a new use.
Search for an entirely different application for an existing product.
- De Beers produced industrial diamonds but found a new use for diamonds when they introduced the concept of engagement rings.
Use a framework like Triz.
Triz is a systematic method for solving problems. Triz can be applied in many fields but is particularly useful in engineering and product design. It provides a toolbox of methods to solve contradictions e.g. how can we make this product run faster but with less power?
Go back in time.
Look at methods and services that were used in your sector years ago but have now fallen out of use. Can one be resurrected in a new updated form? Bring new technology to old tried and true ideas
- Uber to transportation.
- AirBNB to accommodation.
The biggest impact you have to innovation in your organization is making it part of the plan. Making innovation part of people's job description encourages and promotes growth. Measure it and it will happen.
There are 4 growth engines:
When strategic planning, take a step back and be clear about what factors you are targeting for growth and communicate them to all staff.
Remember that effort can be put into all of them concurrently, but only one should take the lion's share of focus to produce great results.