In a world where one third of businesses fail in the first year and only half make it to five years growth is one of the keys to success.
In today’s digital age and the frequent exponential leaps in technology as well as social and political structure that characterise it if your business isn’t growing and evolving you will be stuck standing still while the rest of the world surges ahead.
But while it is quite common for startups to understand the importance of having a business plan for their small business it is far less common to find a well thought out strategy for continued growth.
This article will get you started on creating a business growth strategy which will supercharge your small business growth.
Your value proposition
Talk to ten business strategists about how to create a plan for a startup and chances are the first thing they will tell you to sort out is your value proposition. This is key for business growth no matter your size and you should be able to clearly articulate both what your business does and why customers need it more than your competitors.
But because this is a growth strategy you must also be able to articulate how your value proposition will result in continual new customers over time.
Here are a few helpful tips for developing a value proposition as part of a business plan for small businesses:
- Sentence, paragraph, and beyond: There must be both sharpness and depth to your value proposition. For the classic “elevator pitch” you should be able to sum up your business and what sets it apart from the competition concisely – ideally in a single sentence. But a one-sentence plan is eggshell thin. You should also be able to expand and extend this vision over a paragraph, a page, and beyond. Doing this exercise will help ensure you have both a razor-sharp but also fleshed-out business plan.
- Be first, be the best, or cheat: This is a well known saying but it can help you to think more strategically in terms of your value proposition. Being first is exactly what it sounds like – being the only person in a marketplace has supreme advantages. Being the best means thinking about what it is that you do better than everyone else. This can be about quality, it can be about price, or it can be about convenience. Finally think about cheating! This doesn’t mean doing anything illegal or underhanded but it does mean thinking about what are the unfair advantages you can bring to bear. A coffee shop in an airport does not have to make the best coffee, or offer the best price, it has a captive customer base that it simply has to snare. Think about how you can leverage any unfair advantages you may have, and if you don’t have any think about how you can get them!
- Anticipate market response: There is a well-known military axiom that “no plan ever survives contact with the enemy” and there is a lot to learn from this in business as well. We are living in an age that is increasingly complicated, volatile and fast-changing. If you want to keep up with the pace of technological and social change you will have to be paying attention and anticipating responses and changes. If you have a unique idea people may copy it, if you’re relying on digital trends they will change, customer bases can be fickle. It doesn’t matter what your unique value proposition is any plan you make
must recognise that it will likely become less unique over time. An agile growth plan that takes this into account and stays one step ahead of the market is essential.
Measure, measure, measure
There is no point in creating a plan without being able to measure how effective it has been. Putting in thought ahead of time about how you will track progress, define success, and having clear key progress indicators (KPIs) pays dividends in the long run.
- Be SMART, or be something like it: There are many different models for setting goals but one of the best known is the smart protocol. This method makes sure that goals you set are: Specific, Measurable, Attainable, Relevant and Timely. While this is a good place to start it is by no means the only way to set goals. There are CLEAR goals, BHAG goals, and many many others. Pick one, or use one as your starting point. But make sure you’re setting clear goals.
- A/B testing: Depending on your business type AB testing is a great tool which can help you to grow your customer base. Many businesses have used this to lift their conversation rates by more than 100 percent. But don’t limit your thinking on AB testing to simply online user-experiences and conversion pathways.
- Control group: It sounds simple but you would be surprised how many businesses make large changes, set clear KPIs, but still fail to have any controls. Depending on your business external factors can play a huge part in month-to-month and even year-to-year fluctuations in business. It is not always possible but having a way of separating changes you have made from external changes will help you to identify strengths and weaknesses in your plan and develop your strategy over time.
Many ways to grow
There are many ways to grow a business – in his book The Breakthrough Company entrepreneur and business owner Keith McFarland sets out lessons he learned from observing companies who had maintained a rapid rate of growth over the long term.
In his book McFarland explains there is always a tension between strategies that result in fast growth and strategies that entail low risk. The key is to always aim for the “most results from the least amount of risk and effort”. He breaks these strategies up into intensive and integrative growth strategies.
Intensive Growth Strategies
This is the growth you get from moving into new markets, creating new products, or offering new services. Intensive growth strategies are usually the easiest, and lowest risk, ways to grow your business quickly.
You can break intensive growth strategies up into a number of different areas:
- Market Penetration: Selling more of your product to the same customer base. This can be achieved in multiple ways such as increasing the unit sizes you sell, offering new uses for your product or service, and bundling.
- Market Development: This is expanding your business by offering your product to an adjacent market which can be, but is not limited to geographic location. You can offer services in the next state or city via a franchise arrangement
- Alternative Channels: Simply put this is finding customers in different ways. The internet is the most obvious example of an alternative channel for customer acquisition but it is only a recent example and there are many others such as industry groups and member associations.
- Product Development: Exactly what it sounds like – you are creating something new to sell to new and existing customers. Contrary to what you might expect with a new product McFarland recommends targeting your existing customers first and new customers second – this way you avoid “having to learn a new product and market at the same time”. Think about what Uber did with its Uber Eats platform if you want an example.
- New Products/New Customers: But this is not always the case. You can target a completely new customer market with your service or product. Think about Apple’s success when it moved from personal computing to offer the iPod, iPhone, and iPad.
Integrative Growth Strategies
These are much more difficult for a small business but can provide incredibly lucrative for medium to large business. An integrative growth strategy is one where a business expands sales and profits through acquisitions and mergers within its industry. These can take a number of different forms.
- Backwards: Sometimes also referred to as “vertical” integration this is buying up one or more of your suppliers. This can allow you to reduce costs, develop new products faster, and secure your supply chain.
- Horizontal: This is buying up, or merging with, a competing business or businesses. This both grows your company and takes out a competitor.
- Forward: Also vertical integration but in the other direction to backwards integration – this is buying up your distribution chain rather than your supply chain.
- Diversification: This is acquiring the totality or a piece of, or merging with, firms that are in unrelated businesses. Sometimes this is referred to as conglomerate integration when the two businesses are completely unrelated as is the case with General Electric which has energy, manufacturing, and financial services divisions all under the one banner. It can also include “concentric” diversification which is when the businesses are different but “adjacent” such as has occurred with electronics manufacturers.
Call for Backup
If you are running a business or startup and you’re thinking growth strategies then it pays to at least book a consultation from a business strategist or business strategy consultant.
A consultant will be an expert in adapting established theory and principles in a creative and flexible way to suit your business.
Even if you are doing well it pays to have a second opinion on your strategy. A consultant is the perfect choice for fine tuning both your business plan and growth strategy to help support small business growth.
When selecting a business strategy consultant you should do your research and preferably sit down for an interview before making a decision. This person will have a profound impact on your success so it pays to take your time.
It is helpful to consider the following factors when making your decision:
- Proven track record: It is important to choose someone who has worked with a number of successful businesses over time and who can provide references about their performance and insight.
- Success with established businesses in stable markets: Traders know that “everyone’s a genius in a bull market” and the same is true for consultants. There is a big difference between an established business achieving growth in a stable market and a new business achieving success in a growing market.
- Experience in similar industries: While a lot of strategy is applicable across industries it is usually better to have someone who understands your specific industry and field. It will also save you money as you will spend less time explaining the nuances of your business in the lead-up and can get straight to the strategy.
- Understanding of your vision: Ultimately you are the one with a plan and a vision for your business. If the strategist is unfamiliar, or unsupportive, or your plan you need to ask yourself some hard questions and get a second opinion. They may not be the right person for the role, or you may not have a strategy that is as sound as you believe.
The content is originally posted on medium.