By: Andrew Frazier, MBA, CFA
Many businesses suffer the effects of low or no growth (revenue, profit, etc.) which can lead to disastrous results in today’s fast paced technology driven environment. The rate at which new technologies and business models are being developed to disrupt entire industries, product categories, and service delivery is ever increasing. Customers are becoming more sophisticated and less loyal because they have more options, and it is easy to comparison shop. Competition has increased from both large businesses and international companies. If you haven’t already been impacted, it is only a matter of time. What are you going to do?
A Harvard Business Review article by George Stalk and Henry Foley states that “Some 70% of family-owned businesses fail or are sold before the 2nd generation.” One of the three “Traps” he puts forward is that “The Business Can’t Grow Fast Enough to Support everyone.” This highlights the importance for scaling the business through continuing growth. How can you scale?
Nothing happens without a plan!
Most businesses are not prepared for the challenges because they do not plan or don’t do it effectively. Yes, you are busy and possibly overwhelmed but that is no excuse. Setting goals and developing a strategic plan is critical. The old adage says “Failing to Plan is Planning to Fail.” It is not enough to just have goals; they must be SMART (Specific, Measurable, Achievable, Relevant, Time-Based) Goals that are adopted throughout the organization. They should be growth oriented and a challenge to achieve because growth does not just happen on its own. Once your goals are set it’s time to develop a plan and strategies to achieve them. Effective strategic planning requires research and an external perspective, why wouldn’t you bring someone in to help?
Usually poor or non-existent business planning efforts are due to a lack of knowledge. Your business can only go as far as you are prepared to take it. You must be continuously learning, developing new skills, and evolving to move from working IN your business to working ON your business, to working ON THE FUTURE of your business. These are the Critical Path stages you must take to create a sustainable business that can run without you. The ultimate goal! Where should you start?
Start with the person in the mirror. Preparing yourself to lead growth initiatives within your organization is key. First, you must know the basics and have a fundamental understanding of these foundational questions …
What is your most important job?
S&M! …No not that one! It’s sales and marketing.
What is the difference between sales and marketing?
Sales focuses on transactions and Marketing is focused on relationships
What is Marketing?
Coordinated strategy as opposed to random tactics
Should I market differently as a smaller business?
Definitely! Having less cash requires you to be more creative
What does it mean to market more creatively?
Finding ways to find and exploit the right niche. Being the big fish in small pond!
Is that all?
No! Be flexible and continue to develop your marketing skills (crawl, walk, run)
Traversing the first stage of the Critical Path is about finding a viable market for the product(s) and service(s) that you offer. It is best done by employing the following market strategies…
Don’t try to sell to everyone (Target Market)
Don’t overpay for marketing (Guerilla Marketing)
Make friends (Build Relationships)
Depending on the industry, somewhere between achieving $100k – $500k in revenue most businesses should be entering stage 2 along the Critical Path to growth. During this stage you must pivot to focus on building capacity and optimizing your business. Fewer than 5% of businesses ever reach stage 2 (5 out of 100) and fewer than 5% of these businesses ever make it to stage 3 (25 out of 10,000) and fewer than 5% of these remaining businesses complete stage 3 (125 out of 1 million) . We will discuss the strategies needed to traverse the remaining stages in the 2nd and 3rd articles in this 3-part series.