From companies’ boardroom to corporate planning sessions of big or small, new start-ups or established companies, growth is becoming an increasing popular catchphrase in guiding thinking for the road ahead. Generating strong and profitable growth is never achieved in a vacuum, but a set of managerial actions, plans and decisions forged together.
Whether big or small, new start-ups or established companies, we all want to make rapid or remarkable growth in the ensuing year. Growth challenges everything you thought you knew about business. As the ensuing year (2022) is approaching, or almost here, there’s really a limited time available to start planning and strategizing for growth in the coming year.
Here’s a frame of five tips that start-ups and small business owner/managers should look for as they consider growing their businesses.
Redefine Your Business Model and Target Non-Consumers
To consistently outperformed rivals, having a good business model is not enough. No great business model last forever as a business (big or small) you’re going to need to think and innovate your business model. It’s of this reason that Clayton Christensen pointed out that “a majority of the innovations and business models that exist today are targeted at existing consumers—those who can already afford products on the market.”
Your business model must represent a better way than the existing alternatives, since success isn’t going to be obtain by taking customers from the already shrinking market but to seize new customers. Its arguable more important now than ever to know that your product is not the “product” as usual, your business model is the “product”. This goes to confirm a study pointing to the fact that, businesses will no more compete on products or service but on business model.
According to Clayton Christensen, “’most [organizations] think the key to growth is developing new technologies and products. But often this is not so. To unlock the next wave of growth, companies must embed these innovations in a disruptive new business model.” I have a simple but a strong belief that, the most meaningful way to different your company from your competition, the best way to put distance between you and the crowd, is to have an outstanding business model.
Leverage On Enabling Technologies
We are now in a global environment where everything and everyone is digitally connected to everything and everyone. It’s evidently clear that this digitally momentum is here to stay. The digital world isn’t coming; it here. Businesses are now using digital tools to survive amidst Covid and expected to use these tools to recover post pandemic world. Connected Commerce Council report revealed that “digital tools frequently acted as a “safety net”, helping many small businesses avoid closing, downsizing, and severely reduced revenue.” So it’s no surprise that the internet and rapid advances in digital have taken the marketing world with strong storm.
For businesses to survive, grow quickly and continue doing business successfully for number of years, they must use digital tools to find customers, grow their customer base and pivot their online sales. Small businesses should learn to use digital tools to constantly and consistently communicate with their customers to help them penetrate their market and sell more of their products. Small business must also be interested in using those tools to gain greater visibility, increase customer satisfaction and deliver benefits to customers. It is time small businesses take advantage of surging digital opportunities since its becoming a fertile ground for businesses.
Bill Gates in his classic book “Business at the speed of thought” asserted that “business is going to change more in the next ten years than it has in the last fifty. Questions that business leaders wrestle with all the time is “how can technology help you run your business better? How will technology transform business? How can technology help make you be a winner five or ten years from now?” Small businesses must be using digital technology for new processes that radically improve how they function, that give them the full benefit of all their capabilities, and that give them the speed of response they will need to compete in the emerging high-speed business world.
Focus On Profitability
Profit matters; every business is only as strong as it profits spreadsheet. Profit is the lifeblood of a business, heavily influencing strategies and decisions at every level in the organisation. Profit can make a business succeed and unmake a business to fail as well, when there is a consistent loses. Not only that, profit forms part of or becomes the future capital of every business, hence if one is able to generate profit today, there’s likelihood of having enough capital in the future to expand and grow.
Profit plays a large part in the growth of organisation that want to move to higher heights in growth. To obtain organic growth; that’s growth that occur when a business grows by using its existing resources (Man power, Machines, Money and Materials), focusing on profitability and increasing profit levels consistently can’t be ignored.
To increase profitability level, one need to analyses certain issues and ask certain pertinent and relevant questions such as: analyse profitability by segment, by customer and by product. Where is money made, where is it spent and where are opportunities to increase profitability? How can you improve profitability? Where are your competitors most profitable? What would it require to double your profitability rate and growth rate? According J. Kourdi here are some practical techniques to improve profitability:
- Focus decision making on the profitable areas
- Decide how to treat the least profitable products/service
- Make sure new products enhance overall profitability
- Consider how to increase profitability by managing people
- Consider how to create greater value from existing customers and products to enhance profitability
- Manage development and production decisions
Build A Winning and Flexible Strategy
Having a winning and aspiring strategy could serve as a motivation for your small business growth and success. Your strategy is the game plans, choices and decisions used to guide the business greater profitability and success. As a start-up you’re out there to prove your vision, but to succeed you must have a winning strategy. The process of development and implementing a winning strategy enables you abandon the status quo and strike out on what appears to be a new path, often shrouded in uncertainties.
A strategy will not be successful if it not flexible. Robert Waterman in his classic book “The Frontiers of Excellence’’ asserted that strategies that succeeds are organic. They evolve, they wrap themselves around problems, challenges, and opportunities make progress and move on. Therefore, I personally beseech you to be willing to change your strategic plan, but never give up your core purpose. Be willing to evolve into an entirely different portfolio of activities of what you do today, but never give up on the principles that define your core purpose or business.
The development of strategy according to J. Kourdi involves making decisions about:
- Who to target as customers (and who to avoid targeting)
- What products or services to offer?
- How to undertake related activities efficiently.
In every industry there are several viable positions that a company can occupy. The essence of strategy therefore is to choose the one position that a company will claim as its own.
Exploit Value Innovation or Market Creation Innovation
To succeed, small businesses need to exploit the benefits value innovation brings to the table. Why do some great businesses decline while others go from strength to strength, the difference can be found in value or market creation innovation.
Christensen, writer of Theory of disruptive innovation, believes that a company with fewer resources can challenge more established businesses by introduction simpler, more convenient, and more affordable products through market creation innovation to overserved or overlooked segment of customers, ultimately redefining the industry.
Value innovation is based on the premise that what matters to companies is not simple the need to compete, but rather the need to redefine the market in ways that generate distinctive new benefits for the customers. W. Chan Kim and Renée Mauborgne asserted that value innovation involves challenging and defying conventional wisdom either to redefine or to create a market.
Value innovators break free from the pack by identifying a new market and developing products or services for which there is no direct competitors. To J. Kourdi, one can achieve value innovation through;
- Challenging industry assumption; ask how customers world react if things were different.
- Value Network: acquire good ideas from outside the business as well as from within
- Simplicity: chiefly design a product around the needs of the user
- Understand customer: understand what customers value, how they work, what they want to achieve, what they will enjoy.
- Fail wisely; learn from mistake and try again. Failure is inevitable, but opportunity to learn.
To finish up, growth is necessary, if you’re not growing your small business, how sure are you that you’re not stagnating. Creating sustainable growth for a start-up is a must if you want to be successful. With the help of the simple tips above, I believe you can develop a strong growth from scratch with ease.
Albert Shiebila Mali is an early-stage start-up coach and mentor, business development facilitator and practitioner of entrepreneurship with deep-seated background in accounting, sales and marketing. His much passionate about helping start-ups or SMEs deliver the best possible performance ever through unravelled business development services.
Personal email:[email protected]