This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in February 2015 and is posted here by their kind permission
Planning and executing real growth strategies
The year 2015 stretches ahead, and many entrepreneurs I speak to are still cautious. This is understandable, 2014 was a horror year of violent strikes, power cuts, limited postal service, slow economic growth and uncertainty. The temptation to proceed with caution into 2015 is very strong.
Beware though, caution can become a habit, business plans showing a modest growth on last year can become the norm. The company does not invest in new products, markets or channels, research, marketing and training are put on hold and the company develops a culture where innovation becomes too risky “for now”.
Breaking out from the limited growth habit can be a challenge, but a very worthwhile challenge, if only as a defensive move to stop competitors getting bigger and threatening you.
Going for growth
The management team (even if that is a one person team) must agree a vision of how high you want to go, understand what that takes to get there and commit to the vision. Then translate dreams or visions into SMART goals – Specific, Measurable, Achievable, Relevant and Time Based. Now develop and execute a how-to strategy. It sounds simple doesn’t it?
So we need to ask: “Why then do so few companies grow rapidly while most just plod along?” It cannot be only innovative products and great service because all of us know companies with those qualities which stay more or less the same, while some with ordinary offerings shoot the lights out, even in the harshest of times. Here are five ideas to guide your growth:
- Get real agreement and commitment to grow. Growth plans are traditionally proposed by optimistic marketers and looked at sceptically by finance, but reservations may be held privately or openly by any manager. Hesitancy exerts a braking force on growth activities, stopping the initiative at any time there is a threat and hesitating to spend money on needed resources. You have to be realistic but without real commitment you may fail.
- Make it real. Another all too common obstacle to growth is the growth dream is just a dream. There is no underlying strategy, there are no SMART goals, no supporting budget and the right resources are not committed. Translate the vision into real strategies, make sure the time frames are realistic and be prepared to spend to support of your dreams.
- Growing your existing customer base. This can be the quickest and lowest cost route to doubling turnover. Your goal is to capture 100% share of the customer’s spend on products similar to those you sell. You may be selling large volumes to a small customer without knowing that your big sales are only a tiny percentage of their purchases of similar products. If you sell to large organisations this is a near certainty. Make a serious commitment to professional account management and investigating and understanding all customers’ requirements. Do not be fooled by a salesperson’s smug belief that they know it all.
- Grow at the expense of competitors. Strategies could include buying the smallest and weakest competitors or those which will extend your reach to new areas or new markets, attacking competitors’ customer bases with aggressive marketing and converting competitors into resellers.
- Grow in your areas of strength. Expand by adding synergistic products and services in markets you understand. This is likely to produce quicker returns for less cost that taking on completely new product ranges to be sold to unfamiliar markets. Consider adding new sales channels and products which complement your range as a quick route to growth. Daring adventures into the unknown have produced famous successes but you are much more likely to hear the success story than stories of huge losses and abandoned projects. The further you are from known territory, the more risk you take and the more you should invest in marketing and people. Do not skimp here, you will only be forced to spend it later.
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