How do You Grow Your Business Today?
While having some quiet time I focused my thoughts on what it takes to grow a business today – particularly in light of the interesting market we are in today.
So, I looked into growth patterns and types of growth and meaningful growth and how we should be looking at this universal concept. Having been in the world of business since the early 1970’s, I have seen just about every possible business cycle you can imagine – from hyper inflationary periods when you could get 14% on a bank CD; to mini recessions and lots of boom or go-go periods in between and now the latest addition of major recession. Truthfully, I have not experienced a depression, yet, it was openly shared to me from my grandparents who lived through the worst of times.
Okay, enough background let’s get back on the topic of growth. Other than do you have a plan for your minimum growth to keep your operation functioning productively and keep all your resources engaged – we can move into a few major points to consider when discussing and planning your growth engine.
First, you need to know the range of growth necessary to keep your operation smooth and efficient. No shortages of talent, resources, cash, production or distribution sources and finally products availability for sale. You need to have a clear understanding of the “must have” growth and then an “upper end or maxed out” growth plan. Think contingency planning for both real growth and hyper-growth.
If you do not accurately know the upper and lower limits of growth, you can have serious issues with your operation. Anything below the lower limit cuts into your reserves and resources, can create knowledge loss with de-hiring tactics, financing issues, and less than optimal use of available resources and assets.
If you are over the upper limit of reasonable growth, then you have to begin looking for ways and methods for delivering contracted sales to your customers. Rationing of items is not acceptable to customers who are looking for consistent and long term relationships. The hiring of talent too fast without adequate thought about their job, talent to job matching, and future possibilities for high potential talent – well, leads to frustrated employees and lower morale than you desire.
Second, you need to decide what elements, products or services you need to abandon or throw out of the product mix. This sounds really crazy to a number of executives who must be remembering a economic 101 about cash cows and the like. Well, I believe you need to rethink your position on these matters.
One of the best leaders I ever worked with ran into this issue as one division of his company was holding up a change of direction and focus within his company. He decided this company needed to change its purpose in order to be different in the market place and win more long term accounts. During a meeting with the defiant group, he basically told them they could continue doing what they were doing, yet, do not ask for any more resources for that division. He simply stated he would be providing resources for the new direction only so there would not be anything available for this group if they choose to keep doing things the old (and non-competitive I might add). Amazingly, these group suddenly found the light for their future and joined into the new focus and let go of the past.
Another factor in deciding to let go of some products or services deals with your allocation of both resources and energy. Why continue to chase markets that are dying? Or old technology being phrased out by the vast majority? It is better to find the direction of the market and either get ahead or at the edge of the new wave. By the way, did I mention this is the location for higher margins? Old markets are dominated by standardization and commodity products which have low margins and restricted profitability.
Another point to consider with your thoughts on growth include concentration. Think of this as a laser beam approach to doing business. By finding a niche that perfectly or near perfectly matches your business – then you have a business fit with this market niche. It is now time to concentrate your marketing and sales teams on this market niche. It is like focusing the strength of your business on a target group of accounts who will be very excited to do business with another business that totally understands their business. Focus and concentration are areas of leverage to maximize your returns and results.
Next is the ability to anticipate the direction of change within a market or industry. The more you research an industry and stay current with both the industry and the players, the faster you will recognize a changing trend. Progressive companies want to work with other companies or individuals who understand how the future is changing. Therefore, products and services are designed in advance of the growth opportunities coming soon. The companies who understand and embrace these actions are the ones taking a competitive advantage in the marketplace.
Finally, you must know the difference between healthy growth and questionable growth.
Let’s talk first about healthy growth. This is growth contained in a steady path maximizing rather that “max outing” the system. This growth level is sustainable and allows for flexibility in operations without pain or panic. Another way to think about healthy growth is “organic” growth. This is real growth in your established markets, territories and accounts. The most important factor with healthy growth is reflected in the margin – either maintaining or increasing – is healthy growth.
On the other hand, if you are exceeding your maximum production levels on a regular basis then this is unhealthy growth since your margins are about to get reduced due to overtime expenses, outsourcing production, finding new suppliers to hit new limits, hiring new people who don’t have the expertise or experience level and stretching available resources to the max. Then there are other forms of unhealthy growth such as selling higher units at a much lower margin or even at at small loss. Do not be one the morons who state “we’ll make it up with volume.”
The last point in the unhealthy growth is the acquired growth either from purchasing a competitor, buying a company in a new territory, or taking on an unrelated product mix in the effort to diversity your sales growth. First, the most common thing I see companies do is to over pay for the competitor or the new territory existing company. It is really hard to cover your margins when your fixed cost is too high for the market. The other issue is taking away the concentration or focus of the existing sales and marketing group by asking them to sell this new product. Often the methods of selling the new product or the new market they are expected to sell to is totally different from their existing sales process. Thus, delays occur in the revenue growth due to limited buy in by the existing sales team.
The lesson from this long discussion is – you need to plan your growth rates. Knowing your minimum needed growth rate and the maximum allowable level of growth will optimize your growth engine – supplying both volume and margins for a successful long term growth. Start planning today the future is closer than you know.
Latest posts by Voss Graham (see all)
- How to Create the Future of Your Business - March 7, 2019
- Voss & Robin Graham Discuss InnerActive Consulting Group - March 4, 2019
- Voss Graham interviews Ron Bonnstetter - February 13, 2019
- Hyper Growth is Great for Your Business Success - February 12, 2019
- As a Leader, Sharing Clarity or Confusion? - February 10, 2019