Statistics show that roughly 50% of new businesses make it past their third year. One key way to help your business stay afloat is to plan, specifically plan for growth. Here is a super quick digest of the things you need to look at in a strategic growth plan.
Establish a value proposition
What makes you different? Ask your customers why they buy from you. You should be able to produce a list of no more than 5 reasons why. AND… be able to weight them. Reason 1 may be 50% of the decision to buy from you. Reasons 2 only 10% and so on. If you have a large enough audience, segment it as this 5 reason list may be consistent across the whole customer base but Segment 1’s weighting pattern is likely to be different to Segment 2 or 3 or 4.
Identify your ideal customer
Speaking of your customer base, you’re here to solve problems they have. So, identify the common defining characteristics of the ideal customer. Build a profile of who they are. There are loads of tools online to help you write down a customer persona. Again, if you have a diverse audience base you will need to segment it and create a persona for each segment. You may find this article helpful, with thanks to Hubspot
Define your key growth indicators.
In order to determine if your business is growing or shrinking you need to measure. But what? Pick the five key things that you can accurately track over time and don’t just think in terms of sales and turnover.
Identify your revenue streams
What are your current revenue streams? Can you add any more and, if so, are they sustainable in the long run? Before adding new products or services or seeking a new audience, ensure that you’ve done your utmost to penetrate the markets and audiences you currently sell to with the products or services you currently offer. This is the least risky strategy to explore before you move on to other potential revenue streams.
Know your competitors
Even if you’re the runaway market leader (unlikely) there will be something you can learn from your competitors. Again, pick the 5 key ones that sell the most similar products or services to the most similar markets. These are your direct competitors. Are they growing? If so, how and why? Is their positioning (their value proposition) different? Are their processes tighter so they can produce at a lower cost? They will certainly have made some choices you chose not to or weren’t aware of. Don’t assume you made the right ones. Ask around – at industry events or grill any suppliers or customers you share.
Play to your strengths
If you followed Steps 1 and 5, you should be able to produce a simple grid for yourselves and your competition where you rate yours and their performance out of 10 for each the 5 reasons customers buy and then multiply that rating by the weighting percentage. E.g. Customer service was given a 35% weighting. You score 8 out of 10 and competitor A scores a 6. So, your weighted score would be 8 x 35 = 280 and competitor A would be 210. Conversely, you scored 2 out of 10 on Authority but competitor A scored a 9 BUT this reason was only 5% of the reason customers buy. Your weighted score would be 10 and competitor A would be 45. So, it pays to focus on your strengths first before spending time working on your weaknesses. In the example above, you have the most potential for improvement in the area of establishing Authority but, as it’s such given such a low prominence in the decision making process for your customer it’s a lot of effort for a low reward. You wouldn’t have stayed in business this long if there aren’t at least two of the five reasons that you score well in and are given a high priority by your customers. Focus on improving these to a point where you can’t get any better before trying to change your weaknesses.
Invest in people
Your staff are the ones with the most frequent contact with your customers so make sure they’re happy. They need to be inspired and motivated by your company’s value proposition. Cut back on the premises, the furniture, and the other fixed overheads before you consider being frugal with people. The best ones, that you’ve treated well, will even stick with you if you need to cut back on their remuneration package in a tough period.
Once you have all this in place, don’t park it on a shelf and forget about it. Ensure you’re continually reviewing all its parts as businesses and markets change over time. Make sure you’re following the right growth strategy and measuring the impact of any changes you make to your plan.