Businesses large or small cannot afford to stand still in midst of rising costs, diminishing profits and changing market realities. Rather, the trick is to become an elephant big enough to make a difference, healthy enough to withstand financial currents, strong enough to influence the market and smart enough to avoid growth pitfalls. The author suggests a few key ideas and processes to consider in order to grow the business safely, while maximizing product/service value
1) Approach & mindset to sustainable growth – The secret to successful growth is to approach it as a solid, well thought out project, with focus on sales, infrastructure and domain knowledge, the same way you would approach starting a new business from scratch. We tend to have a huge bias towards believing our business model will succeed, which can be destructive. Strive to be pragmatic with your business model and acknowledge the risks. Invite criticism by surrounding yourself with people who will tell you what they really think, rather then what they think you want to hear.
2) Effective business modeling & decision making – A business model is essentially an assumption model based on your cost estimations and profit projections. The best way to minimize guesswork then is to shoot for specifics and/or hard numbers. The four statements you need for successful business are the month by month – projected revenue, projected cash-flow, projected income (profit/loss) and finally the fiscal year projected balance sheet.
3) Assembling a growth matrix – There are two possible growth strategies – horizontal and vertical. Horizontal growth entails finding new customers for your existing products/services. Vertical growth focuses on getting your current customer base to buy new products or services. A growth matrix can help you organize your revenue stream(s) such that you can identify white space in areas you are not serving with products, services or customers, consequently growth opportunities. Rank these opportunities in terms of their probability of success, evaluating each growth opportunity objectively, comparing potential risk with its potential rewards.
4) Successful action plan – One you have decided on the growth initiative, its time to implement it by putting together a successful action plan as follows. First, the team & leadership needs to be in place that are driven and committed to success. Second, detailed operational process for the new business, while also keep current customers satisfied. Third, execution timeline, metrics and accountability against each task. Fourth, is communication that is seamless and consistent across the organization.
5) Creating value & the perfect USP – There are four categories of customers. Quality seekers who are looking for the best product regardless of price. Service seekers need to feel cared for and that any product related problems after the sale will be addressed right away. Price seekers want to get the lowest price. Finally, the Satisfaction seekers are motivated by the need to feel safe and enjoy a sense of belonging via status, security and/or approval by others. Your product or service USP (unique selling proposition) and thus your branding should be aligned with the category of customers you are enticing to buy your product.
Measures to ensure a successful transition to greater growth include:
- Respecting the microscope
- Sharing the spotlight
- Involving others in shaping the business
- Promoting from within
- Communicating effectively
6) Process building – Well thought out processes enable you to manage growth and build the organization. Create an overview map of key processes of your company and go through each process step and chart out actions to complete that step. Re-examine the processes in light of your growth expectations and make necessary modifications as well as combining tasks for higher efficiency.
In the end, the key is to try and have all your bases covered, with the right people, right plan and key resources at hand, before you enter the growth phase.
The book is an excellent manual for current and future entrepreneurs to understand what pitfalls to avoid and best practices to apply to their business. You can find more details on the book and/or the author here.