Planning for Business Growth
Sunday Business Post June 2016: The lowdown
By Patrick Sutton
Four fully actionable targets for growth
To achieve growth and boost profitability, SMEs and family-owned firms must take decisive action. A strategic plan can help to identify opportunities for growth and set out strategic objectives.
The strategic plan should have fully actionable targets for a specified timeline, be it 12 months, three or five years. They are:
A strategic plan can help them to identify opportunities for growth which will result in an agreed set of strategic objectives. Critical to achieving the success planned for, is a tight and concise implementation programme which should have fully actionable targets for a specified timeline, be it 12 months or three or five years. As part of the figuring out bit it is essential you work out the right business model for you and your business.
Here are five sample strategic objective headings of how some companies set about boosting their growth:
1. Develop a marketing plan with a view to increasing turnover
- Companies typically increase market share through strengthening customer relationships, innovation, skilled & experienced workforce and acquiring competitors.
- Do you understand what your customers want and need, so you can focus your business on customer drivers to gain and keep the customers you actually want. Are your growth plans focused upon customer retention, increasing customer average-spend and gaining your target customers.
- Customer surveys are a powerful way of interacting with customers to find how you can improve your service and product offering.
- Many businesses achieve 80% of sales revenue from 20% of their customers. For an immediate bounce in sales why not concentrate on selling additional products and services to the top 20%, this could have immediate upside on the bottom line.
2. Identify an acquisition target
- It is normal that public limited companies, large companies and multi-nationals achieve growth through acquisition. Just because your small doesn’t say you can’t look at acquisitions to. It is possible to fund acquisitions through structured finance, leveraging the target company’s own assets be it asset finance, invoice discounting, contract finance, stocking loans, bank finance or a combination of all.
- Acquisition programmes are something that should be planned well in advance with experienced professional advisors. It could take a few years to identify a suitable target. The acquisition process can be time consuming and disruptive so it’s essential your own business is stable and working efficiently.
3. Implement programme for staff training and performance improvement
- Does your business have a great team culture where people are rewarded for success and are clear on their authority and responsibilities.
- The most important and expensive resource in many companies is the people. It’s frightening how many companies fail to invest in maximising the output from the workforce and creating an environment where they can reach their true potential. You need to create a culture where staff are made to feel they make a difference and are a true value to the business.
- Staff training programmes will improve the business be it technical, customer service, or personal development. Every staff member should have performance targets for example credit controller is judged on cash collected, production operative on output and wastage, R&D engineer on improvements passed or new products introduced.
4. Carry out additional R&D to make product or service best in class
- Business operates in cycles and unfortunately, the cycles can be unpredictable. Each cycle creates a new situation. In today’s Digital Age everything changes so rapidly so you need to be continually assessing the markets, customers, competitors, and industry experts.
- Innovation or lack thereof can be the difference weather a customer is attracted to your product or service or indeed sticks with it long term. Innovation is one method by which a company may increase market share. When a firm brings to market a new technology, product or service its competitors have yet to offer, it will attract new customers. Many of those may become loyal customers, which adds to the company’s market share and decreases market share for the company from which they switched.
- Whilst SME’s don’t have to be leading the way in disruptive technology developments they can certainly be the best at what they do.
5. Improve profit margins
- Some say cash is king, well without profit you won’t have cash. Many companies have implemented continuous production efficiency programmes, many through lean manufacturing leading to improved efficiencies, improved product quality, reduced lead times and greater customer satisfaction, all of which drive profitability.
- Improved product design or a more efficient customer service delivery will have direct impact on the cost of delivery.
- Better purchasing either through shifting suppliers or renegotiation of existing contracts can directly reduce cost of sales.
- Cost reduction whilst never easy normally yields a direct increase to the bottom line. The problem with many growing businesses is that they end up with continuous spiralling costs which can remain unchecked until too late.
Many times we have been told by business owners there’s nothing they can do to improve their bottom line or drive growth, we say there is always some more you can do. However much you look and however hard you work there are always fresh ways to improve focus and thus profitability. Through analysis, discussion and decision-making, strategic objectives can be identified and agreed and ranked in terms of priority.
It’s essential that the plan is fully costed and the company has the resources to implement the agreed programme. It may be a case you have to revert to your lenders or financiers for additional resources or else scale back the plan.
Belief, vision and action together are powerful drivers of success and most business owners have these in abundance. Ask yourself do you have the energy and passion to deliver success. Whatever the plan is make sure to enjoy the journey.
Patrick Sutton firstname.lastname@example.org is founding partner with O’KellySutton