Money Tree

Create a Growth Strategy for your Business: From Plan to Execution

by | Feb 26, 2020 | Business Growth

If your business is not growing, as a general rule, it’s probably dying. So how does an entrepreneur begin to grow their business from a solid business plan, to big success?

Idea to execution - iLAB

Growing your business is no easy task. It’s often said that the toughest part in business is breaking the first $1million in revenue. After that, scaling becomes an easier process, with a vast variety of options at your disposal, using your company assets and leverage. Growth strategy consulting is also a billion dollar business, with so many ways to do so.

If you scour the internet for answers on how to grow your business, you’ll find thousands of so-called expert recommendations, “pro tips” and more recently, “growth hacks”. These can range from very useful (like creating a sustainable email campaign for leads) to the downright damaging (using cheaper materials or employees to increase revenue). More than any one recommendation, you will need to have the right strategy.

So if your goal is to create sustainable, long-term growth for your business, then you will need to take a number of steps to get there first. Which is not to say some companies haven’t reached mass success by carving their own pathways — nowadays, all you really need is the right product, marketed at the right audience — to have a competitive business, thanks to the internet and because of an exploding population, worldwide.

However, keeping that growth going on a consistent basis is the key. Many businesses have had tremendous success growing quickly in their early years, only to die after not having the right strategies in place. Remember MySpace, or more recently (and chaotically), former healthtech darling Theranos? Of course, most won’t suffer the same fate of success-to-irrelevance as MySpace, or facing multiple lawsuits like Theranos.

In reality, the majority of businesses will plateau after a certain period of growth in their early years. Once that stage is reached, usually three options follow: 1) Sell to a bigger company, 2) Start losing market share and shut down, or 3) Stay in that plateau for years or even decades, without achieving any more fast-growth in the following years.

Therefore, if your objective is to scale quickly and on a consistent basis, you will need a business growth strategy that is time-proven to work. Fortunately, any business strategy worth its salt nowadays includes among others: Competing market forces, technological innovation and knowing your audience — all of which affect the future of your company.

Meeting

Generally speaking, every business owner should create a road map or blueprint to help guide them along their journey of expansion, while reducing the various risks companies face, as they seek exponential growth. This blueprint will help focus priorities, as growth opportunities are found, and help avoiding classic mistakes many entrepreneurs fall for.

This involves a clear picture of your enterprise’s strongest assets — its strengths, such as quality products, renowned services or star employees — as well as its weaknesses. Then, visualise what the best next opportunities are, so you can create a vision for where you see your business in the next year, 5 years and 10 years. This is the start.

Then, an action plan to make that vision a reality needs to be put into place, including all the people (or the machines) involved in accomplishing their respective tasks. Even just having a casual, “back of the napkin” sketch for your company growth plan can be a valuable asset. However, your chances are better with a detailed, strategic growth plan including a brand and mission statements, financial forecasts, and scenario planning.

Brainstorm

The following fast-growth strategies apply to early startups seeking consistent revenue, medium-sized companies wanting to expand, as well as industry leaders like Nestlé, Adidas and Starbucks, who have not only reached the top of their marketplaces, but also become globally-recognised brands, which instantly evoke an image in customers.

Market share

This is probably the most common business growth strategy. Whichever your market is (hospitality, e-commerce, transport, etc.), by capturing a more profound share of your marketplace, you will instantly increase your revenues with wider audiences. You will also increase the scope of your brand, so it becomes ever more recognisable. You can widen your market share by e.g., spending more on marketing, or lowering your prices.

Diversification

Another common strategy to reach exponential growth is to diversify, by developing new products. These can then be sold to your current customers, seeking new options you have created, or new ones. Think of Apple, which began with desktop computers and laptops, followed up by iPods, iPhones, operating systems, iPads, iWatches, payment systems… all leading up to becoming the world’s first trillion dollar valuation company.

However, take note of previous companies which took massive risks by diversifying too much, while neglecting their core products. One example is Evernote, which in 2012 became famous for being one of the first ‘unicorn startups’, an exclusive club for companies (usually within tech) which are worth more than $1 billion. By aggressively pursuing new markets and diversifying with bad products, they nearly ended up broke.

Worth noting is that, when looking at the data of what the big companies’ market growth strategies are, only a few of them view creating new products or services as a central part of their growth. Most successful businesses tend to prioritise their efforts on proven exponential-growth strategies, by optimising core functions of their enterprise, such as sales, branding and marketing, customer experience, and other internal business tasks.

Partnerships

Since the dawn of enterprise, businesses have been partnering up with each other for a number of reasons — from increasing (or monopolising) market share, to alleviating incoming threats. Sometimes it’s to leverage off each other’s assets, like strong teams, powerful tech, valuable trademarks, or even visionary ideas. A company partnership can even be something as simple as a casual agreement to provide customer referrals.

This usually only happens in complementary markets, such as a wedding organisation company, which refers their clients to their event catering or wedding gown partners. Another strategy for increasing corporate growth is what is referred to as joint ventures. These are partnerships where two, three or more companies pool their resources for the purpose of achieving a common task or project, which will ostensibly benefit all of them.

Acquisition

Another powerful way to increase your market share is by acquiring another company. In effect, this can potentially be one of the more cost-effective ways to gain entire new markets, assets, tech, products and/or services, by simply buying them off. Because this instantly provides you with established clients, real estate and operations, you can apply your expertise to increase their value thereafter. Very useful for global expansion.

New Markets

Another way to gain new clientele is by simply finding new markets in other locations. By offering your products and services in a new city, country or even continent, you can increase your total market share by several orders of magnitude — indeed, reaching exponential growth. Just remember to be mindful of the cultural differences and policies.

For a recent, extremely successful example, Tesla recently expanded its manufacturing to China, which up until last year, it was nearly impossible for foreign companies to do. It used to be that you had to get a Chinese partner, while sharing profits and your tech. Now that Tesla has convinced China to change this policy — becoming the first fully foreign-owned car company there — with cheaper labour, their profits have skyrocketed.

Charts

Repositioning

This is a highly effective business growth strategy, long-term. Repositioning means you can acquire new clients and market share by realigning the tasks and improving the efficiency of your current products and services. You can do this by analysing each of them, determine their current profit margins, and further align them with your continually evolving business strategy. You can then leave aside any of the underperforming ones.

Franchising

Franchising is another time-proven strategy that allows you to quickly expand your company. Especially to learn how a small business growth strategy works, with a proven blueprint. This is especially true if you already have a successful, profitable business which can then be replicated in other locations. Since the products, services and processes will likely be the same, it makes it easier to grow your market share this way.

One of the most successful industries for franchising is fast-food — when in doubt, choose an industry where the customer can potentially buy your product more than once a day! For example, Burger King took nearly $5.5 billion in 2019 for its parent company Restaurant Brands, where most revenue happened via franchise fees. The fast-food giant gained $32 billion overall, from their 26,000 locations, all over the world.

Buying a franchise

Another straightforward growth strategy is to simply obtain a franchise from someone else. By buying a franchise from a famous brand, or a highly successful business model, you can acquire a powerful marketing boost thanks to their brand recognition, proven processes and skill-sharing, as well as expert support from the franchise owner.

Importantly, you will need to fully research all the costs involved. This is because most first-time franchise owners are surprised by the amount of costs involved, starting with the initial fee, which can vary from $10,000 to $150,000 — depending on the franchise. However, it can be a rather lucrative business, where you can receive a consistent income, without any R&D or advertising costs, and ride the success of the parent brand.

Money Tree

Something to keep in mind is that, for any growth strategy to work, the effort behind it must be deliberate. From ideation to execution, your chances of exponential growth increase substantially when your strategy gets as much energy as you can put into it, so that it can ‘work its magic’. Not to say that you shouldn’t sleep, but instead of trying one strategy today and a different one next week, put the effort into it, to make sure it works.

Below is a proven pathway to bring your growth strategy forward, by asking a few questions in order to create a tangible, sustainable plan for your company’s growth:

Who’s your Audience?

Think back to why you wanted to start your business in the first place. Your business is meant to solve a problem — or increase the livelihood — of your clientele. Who are your customers? And what about your ideal customers, those you would like to serve. Who are they? Once you figure that out, you will know who your audience is, which you can continually revert back to when figuring out the rest of your business plan, as it evolves.

What’s your Value Proposition?

What is so special about your business? Remember, it has to compete not just with current market players, but with future competitors as well. What specific problem does it solve? If you want your business to have exponential growth, it must have a powerful value proposition, which makes your aforementioned clients jump at the chance to pay for your offerings. It should be innovative, relevant and credible so that they choose you.

This can of course depend on your industry. If you’re a car marker, you might want to focus on luxury, like Bentley. Or if you’re Lamborghini, speed, style and adrenaline is where it’s at, where your value proposition is about being the best in the market. If you’re Honda, it’s all about safety and reliability, with its implied great Japanese design.

Who’s your Competition?

Before looking at market players as competitors, it’s a good exercise to study them to understand what works — what they are good at, what they provide well to their clients. There is much to learn from this, which you can eventually excel at, by then focusing on improving customer experience, quality of service, better quality materials, and so on.

It’s important to keep them as part of your strategy as well, not just to compare what they do against your own company, but because they already have their market share. Therefore, if your strategy involves taking away some of their current customers, you must first understand their business, so you can beat them by improving what they do.

Which are your Key Indicators?

Data is now the most valuable resource in the world, more than oil, diamonds, or tulips. In fact, it’s estimated that 97% of enterprises use data to help them gain opportunities, enhance their marketing, or make their daily operations more efficient. Business growth consultants are also focusing ever more on how to best channel such data. Therefore, gathering this data is paramount for your business. Especially as you measure changes.

Another way of putting it, is that by tracking the changes you make while implementing your business growth strategy, you can know which are effective and which aren’t. That way, you can focus on the ones that work, and eliminate (or reassess) the ones that don’t. Have some key indicators which you can track, in terms of user growth, revenue, etc, while also making sure to A/B test, so you can compare historical data and improve.

Vision

Finally, make sure to invest in top talent, as soon as you can. These are people who should be well paid to do high-end jobs, and are inspired by your company’s vision and value proposition. You can have few employees if you like, but make sure they are well remunerated. That way, they’ll stay around even if better offers come up, as they will be part of your mission. Additionally, they will likely attract other top talent to your business.