Successful startups bring something valuable to the marketplace, such as a new technology, a lower price, or more convenient service. If you’re lucky, your new company might soon confront the challenge of managing fast-paced growth. Unfortunately, some companies, new and established, do not adopt a strategic plan to handle growth, and continue doing what they did when they were new. Worse, some companies may adopt the wrong ideas that jeopardize optimal growth.
One key to managing strategic success is to develop a vision for sustainable long-term growth. A viable plan should attempt to achieve consistent sales growth for several years rather than short bursts of rapid expansion. Without a plan, it’s likely you’re going to lose business or give competitors a chance to take business from you.
When we talk about vision, we are describing the future of your company’s value proposition – what sets you apart from your competitors. Your vision must be one that keeps your company credible, relevant and unique. Why do customers seek out your offerings? Who is your ideal customer, and are you currently serving an audience composed of your ideal customers? The answers to these questions are precisely what’s needed to help you figure out why customers will want to do more business with your company, and how you’ll attract ideal customers.
The reliability of your growth plans depends to a large extent on your revenue streams. You need to evaluate the revenue streams you could profitably add to your business. After identifying potential revenue streams, determine to your best ability whether you’ll be able to sustain these streams over time. Fads can be killers, as some cool ideas and great products might not provide you with a sustainable profitable revenue stream. Much of the decision may hinge on your cost of capital, especially if you need to invest more in order to expand. Calculations such as ROI or Return on Investment are crucial when deciding whether or not to proceed.
A growth plan is useful only to the extent that it is measurable., The plan needs to show the relationships between goals, (such as growth in sales volume, market share, geographic coverage and profit), and the drivers of desired performance, (including product and service quality, new market entry, employee engagement, customer loyalty, cost reduction and many more). Performance goals must be established for business units, regions, departments and individuals.
The metrics used to evaluate how and why your company is growing (or failing to grow) can provide fine-grained visibility into specific product/market combinations. That is, how is demand being fulfilled in each actual and potential market for your offerings. Factors such as logistics, regional preferences, staffing and financing must be quantified, measured and evaluated by each product you offer (or plan to offer) and the markets you operate in. Obviously, some product/market combinations are more valuable than others, and thus are the ones to pursue as you expand your business.
Your plan should set a detailed timetable to meet your growth goals. What size do you want your company to be, and how soon do you want to get there? Once again, the execution of the plan requires you to collect and evaluate specific metrics, and the timetable may need to be adjusted to accommodate what the metrics are telling you. Constraints to growth should not be underestimated, whether they are financial, operational, regulatory or managerial.
Nor should competitive factors be underestimated – it’s likely that some of your competitors have found a way to do some things better than you do. Evaluate competitors honestly by examining the choices they’ve make and how they have positioned themselves differently from your business. In many cases, success revolves around focusing on the things you do right rather than improving weaknesses. Working to your strengths might be least risky way to grow your company.
Finally, growth usually requires new talent. Hiring, compensation, reorganization, promotions and other personnel factors are crucial factors to maintaining your business’ value proposition. You will need to assess your internal knowledge and talent base, and the pros and cons of your organizational structure to support your company’s expansion or diversification. Better to have fewer great, well -compensated employees than a flood of mediocre ones. Your best and most loyal employees are more likely to stick with you as your business is buffeted by the inevitable crosswinds encountered when you grow your company.
Each situation is unique. Don’t be shy about bringing in professionals to help you plan and execute your growth strategy, as a botched expansion can often spell doom for an otherwise steady business.