Does Your Business Have the Right Growth Strategy in Place?

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.—Sun Tzu

A growth strategy isn’t simple. Every business owner knows that. However, having one isn’t a guarantee of success either. The biggest problem isn’t lack of capital, the wrong pricing, or too few customers; it’s about not focusing on the right growth strategy for each business stage, and not being managed and completed by the right people with the right perspective at the right time.

There are four truths about growing a business. It doesn’t matter if it’s a retail, manufacturing, professional or service business. It doesn’t matter if customers are consumers, other businesses, government agencies, or non-profits. Make sure you are thinking and planning with these truths in mind:

In the “Idea Stage,” money is critical. From the Investor and Owner’s perspective, growth is key to their reward. A Pre-Launch growth plan has to set the course and focus on the future.

To have a successful Pre-Launch, we don’t recommend spending time or money creating a business plan. At this stage, it really can’t be a true business plan since it has no history on which to base its assumptions.

We do encourage having a growth strategy that is based on a short (4-6 page) strategy plan. Your plan should contain month-by-month goals, identified revenue sources (including sources for startup needs), and most importantly, expected expense and income projections for one year. Owners and Investors need to remember that every plan is a guess with expectations. The expectations will be tested and become more real at launch, and especially during the first year.

It can be tempting at this stage for Owners to find a partner or co-founder if they’re feeling overwhelmed and not sure what to do first or next. They may also want to get “free” workers and give away equity instead of paying salaries. This can be a good or a very bad mistake. Workers don’t necessarily share an Owner’s perspective about the company’s future; they’re mostly focused on the present and getting their work done. We’ve helped many people get out of bad arrangements that looked like good decisions at the time. Be careful if you choose to use this way to get growing.

Launch is the make-or-break “Survival Stage.” It’s the time to test your business model and the choices of what to sell. Sales are critical but not necessarily consistent. The Owner’s growth strategy should focus on making this stage go better and faster by creating a “business history.”

Someone else, however, has to manage the launch while the Owner stays focused on the future and new opportunities. That person is usually a Manager, or the Owner acting as a manager. The Manager is a key player who will implement the new growth plan, especially at this stage. Drawing on past experiences of successes and failures, the Manager’s perspective should focus on finding initial and repeat sales.

Launch is not smooth, and it’s not quick. In fact, it may last years—not weeks or months—as the rocky parts are smoothed out, altered, or jettisoned. Frequently, the Manager, the Owner, and the Investor are at odds, even when they are the same person. This is where perspective and point of view can really jeopardize the future. The Manager will crave consistency and sticking with “the plan” no matter what; the Owner and the Investor will take a higher 40,000 foot view and be willing to change—sometimes too fast for the Manager’s comfort.

The Launch growth plan should have an “early warning system.” Owners and Investors should be prepared to jettison losing products or services. In addition, the plan also needs to have sales and business model alternatives ready. Most likely, the Manager will need to implement at least some of these alternatives.

You may not have thought about having a post-launch growth strategy, but it’s kind of like the song “ After the Ball.” All the fun, hoopla, and celebration of the Launch has ended; now it’s all about cleaning up, dealing with the day-to-day issues, and slogging through the problems.

Transition:  The first part of post-launch is the “Transition Stage,” and time is critical. At this point, most Owners need to step away from the day-to-day, and this is where employees really matter most. An employee’s perspective is on the present, getting the work done—and that’s what’s needed. However, it can also put them at odds with the 360-degree future focus of the Owner and Investor, and the Manager’s perspective and desire for consistency based on past experiences.

Now is the time to hire and onboard the right people in the right jobs, providing them with the financial, sales, and marketing support they need to get their work done right, profitably. Owners who are thinking like Investors are ready to seek temporary and later permanent staff to assist them AFTER they know what needs to be done and how.

An appropriate growth strategy should focus on getting the work done efficiently by workers other than the Owner, and creating and implementing systems that will help them work more wisely and timely. Staffing will change as the business becomes more sophisticated.

Caveat: If Owners or Investors are also acting as employees, it can be very tempting for them to focus on what’s due in the present, and losing site of the big picture. Big mistake. Stick to the plan.

Stable Stage.  Preexisting legal, marketing, and financial problems are solved in the “Stable Stage.” Once the business’s financial ups and downs even out and sales are consistent, Owners can breathe easier. Many small business owners, who like playing an active role in providing products or services to customers, never want to move past this stage and are very content. Freedom and independence are critical.

In this stage, the business is run by managers and employees, and the business is proactive in order to maintain its positioning and competitive advantage. The growth strategy plan should now focus on tracking and maintenance, keeping everything up to date—including the skills of employees and management. The goal is to run the business better and more efficiently through the consistent use of best practices in terms of processes and procedures.

Growth Stage.  Businesses in the “Growth Stage” seek new markets, new products, and new opportunities. The growth strategy should focus on efficiency; it defines how to further refine processes and systems to manage new opportunities, and old processes are discarded. It also means a greater attention to detail than before—as much as in the original Launch Stage if not more.

Exit/Transference Stage.  Businesses in the “Exit” or “Transference Stage” are established and stable. Owners change strategy from management and maintenance to transference. They consider selling the business, licensing or franchising it, or taking it public. They spend their time actively seeking opportunities rather than running the business. Return on investment is critical, and that is the focus of the growth strategy.

Now is the time when Owners and Investors can really use a true business plan. This requires knowing how this particular business venture story ends:

You may want some help from a business growth calculator, and there are lots of them out there. There are free, simple ones like this one from Bankrate that calculate gross profit —it’s fine unless you don’t really have a cost of goods. Then there are others like those on this list from Entrepreneur.com that can be used to calculate other parts of the growth strategy puzzle: break-even, investment offering, conversion, email ROI, pay-per-click ROI, and even startup costs.

These calculators are not recommendations, only some resources that might work appropriately for your needs. You or your business strategist can decide.

Your biggest tool is going to be your time tracker. This involves tracking everyone’s time for administrative work, business development, research, and travel, as well as time that generates income from some customer somewhere. You can estimate, but then verify and use that to adjust your current and future plans as necessary.

Tools are great, but start right. You will build a strong business and maintain momentum if you keep focused on what’s needed at each growth stage.

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