To stay one step ahead and ensure your business flourishes, planning for growth is a step no business owner should overlook. Our how-to guide provides you with the information you need to come up with your own business growth strategy, how to execute it and why it is such an important step in planning for your business’s future.
Image: ©Moster Ztudio via canva.com
What is Business Growth?
Growth is not an easy term to define for a business, as there are many metrics that growth could be referring to. Examples of these are revenue, assets, number of customers or profits.
Which metrics a business should focus on is dependent on individual circumstances. The industry or how long the business has been trading could be influencing factors. A long-established company may focus on growing profits through increasing sales or cutting costs, whereas a start-up may aim for growing customer numbers initially at the sacrifice of profits.
Ultimately, growth is a comparative measure. As such, businesses need to track and analyse their growth over time. This allows them to understand the impact of their strategies so they can learn from and develop them.
Predicting Growth – Using a Business Growth Strategy
We know that growth can come in different forms for different businesses. A business growth strategy is what ensures this growth happens.
Growth strategies may sound like more buzzwords straight out of Silicon Valley, but any business can benefit from a well-thought-out, well-executed plan. It is exactly this sort of forward-thinking that can set a business apart in its field and have its numbers climb whilst others falter.
To develop an impactful growth strategy, first, it is key to set ambitious but realistic growth targets. Then, a plan must be devised for how to achieve these goals.
Set Your Growth Targets
Image: ©ormalternative via canva.com
Once a metric to grow has been decided on, setting a target is the next step. It may be a concept we’ve used since school, but SMART targets are a simple and effective way to create targets. This means that a target should be Specific, Measurable, Achievable, Relevant and Time-related. We’ll tackle each of these steps one by one to give you an insight into the concepts you should be considering.
Specific
Pick a metric and stick with it. For example, net profit could be what you wish to target.
Measurable
The metric you have chosen should be something quantifiable. In our net profit example, this is a figure that you can calculate and should already be aware of.
Achievable
There is no merit in setting yourself up to fail. As much as every business owner would love to see exponential growth, the realities are often that a slow and steady increase is more likely. Looking at previous performance and analysing factors that may affect your metric can give a good idea of what is achievable. A stretching goal can help drive motivation, but a goal that remains constantly out of reach will only lead to disappointment.
Relevant
The metric you choose must be relevant to what you want to achieve. If the aim is to increase the size of a customer base in the early stages of a start-up, concentrating on costs may prove to be a distraction to your immediate goals.
Time-related
Targets can change over time, and it is important to regularly consider what is most relevant to a business at any given time. As such, setting time-related goals can help keep you on track and give you something to work towards. If a longer-term target is set, regular milestones can help provide a check that you are on track and ensure people stay motivated throughout the year.
What Should Be Included in a Business Growth Strategy?
Taking growing revenue as an example, a growth strategy could include:
Increase spending on existing marketing channels to generate more leads. This could mean allocating more budget to paid advertising or generating a more considered email marketing campaign.
Invest in new marketing channels to reach different customer segments. If you currently rely on inbound sales, you could invest in an outbound strategy. For many businesses, social media can be a powerful selling tool so outsourcing your social media strategy to a high-calibre agency can be an appealing route.
Optimise sales strategies to improve customer conversions. Marketing spend means each potential customer that comes knocking on your door has cost the business money. This means you should be making the most of every opportunity, analysing sales by comparing won and lost leads can give great insight into building a sales strategy.
Develop more premium products or services that command higher selling prices. “Premiumisation” is a well-proven concept that most businesses can benefit from. Emphasising your product’s or service’s superior quality and exclusivity can help a business achieve higher margins.
Some aspects of your growth strategy could be achieved within existing spending, such as process improvements. However, many steps will have a cost involved so it is essential to account for this in budgets and financial forecasts.
Consideration should also be given to how these steps are funded. Growing organically is a safe goal, as a business only increases spending once it has earned the profits to cover it.
For others, a bolder growth strategy facilitated through additional debt can yield dramatic results in a shorter timeframe. New debt always comes with risk though and businesses should always ensure they can comfortably service this debt even if growth is lower than hoped.
Executing a Business Growth Strategy
Image: ©Ross Helen via canva.com
Having set out a well-considered business growth plan, the next step is making sure these goals are achieved in reality. Executing your plan successfully means striking the right balance between staying on message and adapting to unexpected events.
Keeping your plan in mind when making any business decision is a sure-fire way of ensuring you achieve your goals. If you’ve set stretching goals there will be times when they may seem unachievable, but it is important to stick to them.
Having said that, nothing is certain in business and sometimes expectations need to change. Unexpected events can mean that goals should be adjusted up or down, but it is important to always ask yourself if changing the final aim is the right thing to do.
Final Thoughts
Business growth is a key concept to understand for anyone who wants to run a successful business. But for those who really want their business to thrive, the devil is in the detail.
A well-planned, well-executed growth strategy can ensure that those profit forecasts keep business owners smiling.
