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The easiest way to grow is to sell more products or services to existing customers and increase your customer base. It sounds simple, but achieving organic growth isn’t always easy. Three experts from consultancy RSM share insights on how businesses can successfully create an organic growth strategy.
The most pressing – and fundamental – prerequisite for growth is “understanding why you want it,” says Andy Graham, Director of Business Advisory at RSM.. “When a business owner asks me about growth, I want to dig in and understand what is the motivation for actually wanting such growth. They may not be getting the revenue or value they want from the existing business, and this may be due to the way it is configured, or gaps in their offering, or the limited size of their market place. “
“For me, the starting point is to understand what’s driving the growth, what they’re trying to solve — and then what’s the risk appetite of the owners, because growth requires you to take more risk.”
A business needs to understand its capabilities from the start, says Graham. “Ability is really important: it starts with the business looking beyond the boundaries and examining the market, probably in a wider context than the existing environment. Then it’s about understanding the ability of the people in the business to make good risk-based decisions to ensure that the bets they make are risk-driven.”
Understanding the risks should clarify expectations, he says. “As an advisor, I want to see a clear growth plan around ROI expectations and tolerances and over time periods. How long are you prepared to be in a loss lead? If the period is two years, you are guided by the expectation that you should break even in the third year and then expect profits in the fourth and fifth years. I need to see the return on investment, the time frame, the risk management plan and the scenario of how you will handle a situation where the growth plan goes wrong.”
Vision
A business cannot grow without a vision – otherwise it tries to achieve “growth for growth’s sake”, says Andrew Sykes, also director of RSM’s Business Advisory department. “Growth is first and foremost about having a vision of where you want your business to be in five years, 10 years, and 20 years. Then it’s about a strategy to make that vision achievable – broken down into actions over 12 months that will help achieve that vision. Then it’s about your tactics – which is what you do every day to follow the strategy. Many businesses think they have a vision and a strategy, but lack tactics.”
A growth strategy is just as important as an employment strategy, a sales strategy and “all the other strategies that are run every day in the business,” says Sykes. “If you’ve set a growth strategy, you need to focus on it as a goal. The truly successful businesses are those where the business owner gives himself space during the day to focus on the growth strategy and how the business is connected to that.”
A vision for growth must be accompanied by a clear understanding of what it will take to achieve it, says Patrick Flanagan, Director of Business Advisory. “Say you decide, ‘I want to grow 40% over the next three years.’ Then you have to get to the next level of how you’re going to achieve that: is it going to be driven by product research and development, is it going to be driven by marketing, is it going to be driven by your business development? guys, will it be powered by an acquisition? It’s about being clear about where your gaps are and what you’re missing in your mix to achieve that.”
Recommendations for an organic growth strategy
Based on their years of growth consulting experience, a trio of RSM consultants have proposed ten 10 recommendations for businesses looking to increase their sales and headcount:
Define your niche
What is your sustainable competitive advantage that differentiates your business, product or service from the competition. Understand the niche market you are providing more value to.
Create, support and deliver your value proposition
What are the things you provide? Is it the level of service, the quality, the brand, the prices, or all of them? Never let these components slide and always test and retest as they evolve.
Understand your customers
Do the work to develop a clear idea of the type of client who buys your product or service. Understand what drives their purchasing decisions so you can market to different clients.
Become more tech savvy
In today’s digital age, technology certainly has the power to disrupt business, but it also gives smaller businesses an unprecedented ability to compete, expand their reach, and thrive. Business owners simply need to understand the scope of new technologies—or at least employ people who do—so that digital tools are used with optimal efficiency and cybersecurity risks are minimized.
Stay on top of the numbers
Gone are the days when you gained control of your business data by manually generating invoices and tax returns once or twice a year. Technology such as cloud-based accounting software allows you to maintain financial statements in virtually real-time, so trends – good and bad – can be quickly identified and acted upon. Your accountant, your banker, your business advisor and you all should have an up-to-date view of how the business is traveling to give your business maximum flexibility to solve problems or take advantage of opportunities.
Enter social media
Social media scares many business owners, but the possibilities it offers in areas such as marketing, customer engagement, brand awareness and customer service are vast and profound. Turn it to your advantage.
Product/range expansion
Where you have a market that appreciates your product or service, constantly ask yourself what changes, adaptations, new products or range expansions are possible to generate more income or better yet new sources of income.
New geographies
If you have customers who like your product or service, there are likely to be more who would too; whether interstate or overseas. Expanding into new regions brings a new set of risks and challenges and must be thoroughly researched and planned, but it can greatly accelerate your growth trajectory.
Openness of financing/investment
At some point, growth plans will likely require some kind of financing or investment package; the business owner may need to take on liabilities or give up some equity ownership in order to move to the next stages of growth. This must be well understood and planned.
Understanding the exit strategy
Business owners may understand why they started their business and why they grew it, but too many lose sight of the end game of selling, exiting or passing on their business. At some point you will leave the business, voluntarily or otherwise, so it is best to have your exit strategy clearly defined.
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