Businesses live and die by the way they handle setbacks and failures. But how they handle growth and success can be equally as important.
For startups and small businesses, it may seem like all growth is good growth. But growing too rapidly without a documented growth plan can lead to dangerous pitfalls. In fact, growing without a plan may be worse than not growing at all.
According to the Small Business Association (SBA), 50% of businesses fail during their first five years and 66% fail during their first ten. While these numbers are more hopeful than the oft-cited (but misleading) “8 out of 10 businesses fail in the first year” statistic, it still offers some perspective on how rapid success can spell doom when you don’t have a plan.
If your business gets too far ahead of itself, your team could find themselves in a situation where they can’t live up to all their commitments. Processes could break down and morale could plummet. You may have to make cutbacks just to keep the business alive.
When implemented correctly, a growth plan can help you avoid the most common pitfalls and stay on trajectory. Here’s what you need to know.
What a Growth Plan Isn’t
Growth plans are not the same thing as marketing growth strategies or sales strategies. Those two components will play a large part in how you reach your growth goals, but they don’t make up your growth plan in and of itself.
In addition to your market goals, your growth plan should focus on how you intend to scale your internal processes to meet increasing demands.
Your plan should help you project your growth in the coming years, even 10 years down the road. You should document revenue goals, but also your goals for hiring new talent, onboarding new technology, and rolling out new products or services.
How to Build a Growth Plan
Your growth plan is your business’s chance to make sense of the chaos that often accompanies growth. Instead of making reactionary decisions, all your decisions will instead be deliberate and calculated.
You may revise your growth plan over time, as the plan should be determined by metrics and KPIs. For example, a new sales system you had your eyes on five years ago may not make sense when it’s finally time to onboard it. Markets change, as does the fabric of your business.
But if you start with an achievable plan, you’ll be able to make changes accordingly without derailing your entire initiative.
Identify Your Value Proposition
Your value proposition is what sets you apart from your competition. Why should customers buy from you and not someone else?
If you already have a value proposition, don’t hesitate to take a second look at it. You may want to shift your business model based on hard-earned experience. Always search for new ways to add value to the market.
Define Your KPIs
If you want to scale effectively, you need to be able to measure it. You may have a single KPI that guides your growth strategy, but more likely than not, your plan will be informed by a combination of several.
Inevitably, most of your KPIs will be tied to your finances. Some of the most important KPIs for growing businesses include:
- Revenue growth
- Sales growth
- Revenue concentration (number of revenue sources)
- Customer lifetime value
- Customer acquisition cost
- Closed-lost reason
- Market share
- Profitability over time
- Working capital
Your KPIs will help you ensure your business is on track for its growth goals. They can even tell you which areas of your business need improvement, and which areas present opportunities for even more growth.
Forecast Your Revenue
If you intend to sustain your growth, you need to identify where your revenue will come from. It’s not enough to devise a marketing strategy and hope for the best.
Future revenue may come from tapping into new markets, rolling out new products or services, upselling your existing customers, or all the above. It all depends on what value you intend to bring to that market.
Next, you should try to forecast your revenue. To do this, start with your expenses. Identify both your fixed and variable costs. To be prudent, overestimate costs whenever possible.
Then, create a conservative estimate for revenue growth. This will serve as your baseline, but it shouldn’t stop you from dreaming big. Create an optimistic estimate to shoot for, too.
Go for Low-Hanging Fruit
Even if you have big plans for the growth of your business, incorporating small improvements into your growth plan is an important step for getting on track.
Often, these will be improvements that have nagged you for months, but you just haven’t had the time or resources to tackle them. If you know how to fix a kink in your marketing and sales process, for example, prioritize it before you scale. Otherwise, that kink could turn into a serious problem down the road.
Additionally, don’t attempt to do everything from scratch. Thousands of businesses have been where you are now. Learn how other companies tackled the same challenges and see if you can apply their solutions to your own business.
Make Strategic Technology Investments
One of the most common mistakes businesses make when they are growing is investing in too much technology or investing in technology they won’t use.
For example, most of today’s companies, large or small, consider analytics a strategic investment. 59% of executives from around the world say analytics gives them a competitive advantage and 77% of executives reported an increase in their access to useful data in 2017 — however, only 49% say they are using their data effectively, fewer than the percentage who said so in 2012.
(Source: Marketing Charts)
Just because technology is available, that doesn’t mean you should invest in it. Run a cost-benefit analysis before signing any contractual agreements. If possible, demo each piece of technology before making a commitment. You may want to solicit feedback from your entire team as well.
It can also be tempting to invest in technology based on what’s trending. If you’re in the process of optimizing your marketing technology stack, you may want to invest in the most complete and innovative CRM software on the market. But if you can’t derive value from that CRM, or if many of its features go unused, that could be a wasted investment.
You want to get ahead of your competitors, but you don’t want to disrupt your operations so thoroughly that your employees feel like they’re working at a completely different company when they come into work the next week.
Strategic technology investments are made carefully and, sometimes, incrementally. Build a timetable for technology investments, then create shortlists for possible solutions throughout your timetable. Prepare your staff and get buy-in before onboarding any new technology.
Keep in mind that there may be a period of disruption and learning before your business can fully leverage its new technology. If technology onboarding is too disruptive, you can always consult with outsourced experts to help you coordinate.
Conduct Regular Audits
Lastly, don’t let your growth plan be static. You can’t anticipate and plan for every contingency — you have no control over your competitors or the marketplace, so you may need to adjust your plan later.
Conduct quarterly or yearly audits of your growth plan to assess your progress, ensure you’re on track and rethink your milestones.
Execute Your Strategic Growth Plan
If you’re struggling to craft your growth plan or you need help seeing it through, you may just lack time and internal resources.
Growth Panda’s team of strategy experts are ready to help you make your business growth strategy a reality. Contact us today to discuss your goals.