While most intuitively know that if your company growth slows or declines, a company can go bankrupt. But you might be surprised to know that you can grow too fast and go out of business as a consequence. As Goldilocks once said, “Not too hot, not too cold.” So should be the state of a company’s health and its approach to business growth strategies.
So, what is the right amount of growth?
It may seem that companies can coast by simply maintaining the status quo of their business, but I would argue that a company is either growing or dying. How do you ensure you are growing since the alternative is not desireable?
7 Questions to Consider Whether You are Ready for Growth
First, you should consider whether you are ready for growth. “But I thought you just said that a company has only two options, either to grow or die?”
I did say that, but you don’t want to launch into a business growth plan too quickly without the proper strategy and planning. That can be just as catastrophic as choosing to try to maintain the status quo for too long.
Ask yourself these seven questions before you enact any business growth strategy to see if you are ready.
1. Workforce Supply
Do you have enough workers?
Do you have the right culture-fit employees?
Do you have the right types of skills on your team as more work is trending toward higher-skilled work?
Maybe you need help recruiting Millennials. Discussing this with your team leaders and HR folks can be a real eye-opener. This issue is not one that will go away anytime soon as many companies are challenged with finding quality employees who are the right skills and culture fit.
2. Orders or Service Capacity (Vendor Capacity)
If your orders, revenues, or sales suddenly doubled or tripled, could you handle the growth without choking?
Do you have the space, equipment, property needed to fulfill those significantly higher orders or service requests?
Can your current vendors manage the jump in growth? Perhaps, you need to replace or supplement some of those before you get in a pickle and have to turn away or significantly delay some of this new business that you’ve just spent a ton of time and money getting in the door.
3. Communications (Internal & External)
How are you communicating with your employees?
What about your customers, clients, or vendors? Do your employees know what your brand stands for?
Do they know how to communicate this to existing and potential customers? It might be a good time to chat with your team leaders and formalize your communications plan to make sure everyone is on the same page. Enacting a growth strategy without everyone on the same page can cause some miscommunication, undercutting your growth strategy.
4. Targeted Marketing Campaigns
Consider doing highly targeted campaigns to grow your business, whether digital or traditional marketing. Most of your customers are bombarded with generic ads every day. Find out where your customers hang out, whether physically or digitally, and speak directly to them there.
Not only will this make for more focused targeting, it is usually a better use of financial resources since you don’t have to talk to the masses who aren’t really that interested in your products and services.
5. Financial Resources
Do you have the necessary finances it takes to buy additional equipment, inventory, or hire new staff for months or years before they will contribute to the bottom line?
While it might be tempting to think that we can just figure that out later…once growth happens, that can lead to a bad situation where you can’t deliver on the promises you just made to these new customers. You can borrow money from a bank, add equity through shareholders, or use an alternative financing model like supplier financing.
6. Competitive Outlook
Have you taken a survey of your competition? Are they well-heeled? Or are they struggling? Taking this into account will help you determine how aggressive you can be in your growth plans.
7. Can Clients Grow with You?
As you grow, some clients won’t want to adjust to their expectations to your new size. Perhaps, their account, which was once a larger one, is now smaller relative to your other new clients. Yet they still expect the same level of attention, and that just isn’t possible anymore.
Plus, you may realize that some of your clients aren’t all that profitable, and you may consider respectfully declining to continue to do business with them since that would keep you from other new profitable customers. In that case, it would help lessen the blow if you can find another company willing to fulfill their requests going forward as well as giving them plenty of lead time to find another vendor.
10 Business Growth Strategies You Can’t Afford to Ignore
Most of us have heard this adage, but it cannot be emphasized enough. Each of these ten business growth strategies requires planning, preparation, and communication to those on your team that are going to implement them in order to have a chance at success. It would be unwise to underestimate the importance of proper setup.
“Failing to plan is planning to fail.” -Benjamin Franklin
1. Market Share Penetration
How much of the market do you own?
Perhaps, you don’t know precise numbers, but with a little digging around, you can usually come up with some rough idea. Use this to identify weaker competitors who might have significant market share that you can start to chip away at.
2. Market Segmentation Expansion
Is there a part of the market currently being underserved?
Maybe there is a niche that very few are serving well. This could be a product or service related to one you are offering now but haven’t considered how that would solve a new market’s problem, sometimes even with the exact same offering.
3. Product Development
New product development, product line extension, or a product reformulation/retooling are a few ways you can look to expand your offerings and thus grow your sales. Get creative, but not just for its sake alone; take a look at what your customers really want, need, and are willing to pay for.
Just another “me too” product line extension probably won’t cut it against stiff market competition.
Who hasn’t heard of diversification?
If you have too much of your overall business sales with one or two customers or with one industry, it might be time to find other companies or industries to tap, even if they are doing well and growing. Being beholden to one company can create a scenario where they have all of the negotiating power, and they may leverage that to increase the length of their payment terms, say from 30 to 90 days, or some other distasteful decision that you are forced to swallow.
But you want to be strategic on how you diversify too. Choose wisely which industries or markets to target; it’s best to select ones that can be profitable.
5. Mergers or Acquisitions
What vendor, competitor, or other company can you merge with or acquire?
Look for weaker companies to approach about merging or acquiring them. If you are living in a sea of strong industry competition, perhaps it might be best to see if one of them are willing to buy you out. Just know that in the latter scenario, you will likely have little negotiating power.
But it might be the right move to allow your company and employees to grow and thrive, especially if you have limited financial firepower. And after you merge, don’t forget to think about how you integrate both companies.
6. Alternative Channels
Maybe you sell everything through wholesalers. Or you only have one retail store. In either case, you could add the other one you don’t currently offer or perhaps even add an online shopping option. Or maybe you start selling direct in addition to your wholesale channel.
The key here is communication with existing channels so there aren’t hurt feelings or lost business. Or if you plan to lose business in one area, make sure that it will be more than made up for in another area, either in total sales volume or profit or both.
7. Reducing or Increasing Prices
“What? Increase prices,” you say? “I couldn’t do that; it would upset too many of my customers.”
True, it might cause you to lose a customer or two, but part of that is how well the price is communicated. Many times, customers will understand an increase if their prices haven’t gone up in many years, and you remind them of this fact along with solid reasons their costs are going up. Plus, taking a personal approach of communicating this face-to-face with all of, or at least, your top customers will go a long way towards assuring them that their business is important. Here are some tips for raising your prices without losing customers.
Or on the flip side, perhaps a strategic price reduction for specific items is in order. This could help drive market share for a product that gets the customer in the door in order to sell them something else more profitable later.
8. Steal Competitor Strategies
If it’s working for the competition, why not borrow a page from their playbook.
Now, I’m not advocating doing anything illegal or unethical, but if you can gain knowledge of what they’re doing on the up-and-up, then why not do so. Keep in mind that you may need to modify their strategies to your own company, but by the same token, be careful not to water it down too much, thus losing the power of what’s working for them.
9. Key Partnerships or Alliances
Are there other companies or influential people in your industry that you can align yourself with to grow your revenues. Typically, these aren’t your industry leaders since they don’t need your help in return. But if you can find a company or person that has a certain level of success and needs others to create a win-win scenario for both organizations, then by all means do it. Check out these tips for successful partnerships and alliances.
10. Brand Differentiation
Are your brand and products you sell truly differentiated in the market?
Perhaps, you have the best quality, or maybe you have the fastest turnaround. Or you have the most advanced product on the market. Just make sure you have something that is genuinely unique, that sets you apart and actually matters to your customer, meaning they are willing to pay for it at a price you can make a profit. And make sure to communicate that to potential customers as your main point of differentiation from the competition.
How Imaginasium Can Support Your Business Growth Strategies
This post has probably given you a lot to think about.
Perhaps you sense that you may need some assistance mapping all of this out. If that’s you, then please give us a call or email us. We would love the opportunity to see how we might be able to help you with planning, preparation, and communication of your business growth strategies.