There are few companies that do not have a desire to grow. Sometimes they consider the HOW of it, but often it is a thought process that goes like "why don't we just sell more of our current products (or services)?
The real question is not whether to grow your business, but rather where and how to invest in its growth, with the lowest risk. We advise our clients, to grow their business within the boundaries of their current core business. Companies may have more than one business but their core business probably produces most revenues and profit.
We advise our clients to contemplate growing their business incrementally at an achievable sustained rate over the long term, by using the following:
- An effective and adaptable management team
- Solid strategies that are linked to the company's core
- Growth strategies that levers a company's core business
- To achieve this type of growth, a highly engaged workforce is required
- The workforce must be aligned with the company's core and its strategies
- The workforce must align with with a company's core strengths and its IP
- Strategies requiring moves away from the company's core should be into areas similar ("adjacent", not greatly different) to its current core business
Chris Zook - Bain and Company, stated in his book 'Beyond the Core'; "In the period 1997 to 2002 that in 25 business calamities, a failed growth strategy was a critical factor in 75% of these business disasters". Mostly examples of 'companies swinging for the fences', getting into unknown areas that were too far removed from their core businesses.
We suggest to our clients that they use repeated applications of known successful moves into adjacent markets that present opportunities, and successfully grow their businesses over the longer term. Their goals should be:
- Revenue growth for each adjacency in 3-5 years - at least 5% CAG
- Gross margins in excess of - 43% of net revenues
- Capital Expenditures for long-term plan - < 5% of net revenues
- Human Asset acquisition and training - 3% - 5% of net sales
- Employee turnover in a 3 to 5 year period - < 10% of total headcount
- Requirement for Capacity Additions - 1.7% times CAG in Sales
Growing Organically is a realizable strategy for most smaller companies, especially if their Core Business model is in good shape and the company operates efficiently. The first steps a company desiring growth should take is to examine the strengths and weaknesses of its core business, and the opportunities offered by its markets.
Business Growth Strategies
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StrategicVisions has the experience, the technological and sociological know-how, and the tools, to help small and medium enterprises launch growth initiatives that will succeed.
What do we know about their business? Not as much as the owners, but we have the knowledgeable objectivity that ensures that these enterprises will implement the best strategies, Execute on them, and grow successfully.
