1. Planning is vital
David Foster, MD, Winning Business
A plan is no more than a route map. You wouldn’t drive to somewhere you have never been before unless you had a map or you wouldn’t know which way to turn out of the drive. Without a plan, you have no idea which direction to drive in and you’ve got no chance of getting to where you want to be. The need for a plan is fundamental to everything we do. It is as simple as having an understanding of where you are trying to get to, an idea of the vehicle you are going to use, the type of business you are going to run or the structure you’re going to use, and an idea of the costs and the timings involved. For all my clients, big or small, I liken it to going on a trip to a new place.
You have to understand what you mean by growth – is it growth in terms of profitability, employee numbers or market presence? And then you have to be realistic about it. Planning the growth of any business is vital, but you should also know when to abandon or change those plans. Too many people stick to plans whatever happens, and that’s also a big risk.
2. Know your finances
Ian Gordon, Head of Leadership & Management Programmes, Lancaster University Management School
Growth is another factor in the business that has to be managed. If you get the cash right, then most other things will fall into place. When businesses are growing, they need to know how to count the numbers, and they need to know what the numbers are telling them. Without an understanding of them, you are tying one hand behind your back in terms of your ability to grow, and you’re exposing yourself to unnecessary risk. For all the businesses I work with, I strongly recommend dashboard reports – a one-page report which brings out the key financial measurements that are unique to that organisation, relevant to the customers they are serving and appropriate for the business’s industry.
Take two businesses providing the same services to the same market. The business with a good cash reserve will survive longer and be in a more competitive position than another which has an equally good service but hasn’t got the same financial reserves. You can run an entire business on cash flow in the SME sector. You don’t have to look at the profit and loss balance sheet – not that these aren’t critically important – but for the management of the growth of a business, you can do all of that on cash flow.
3. Keep your staff engaged
Peter Rogan, MD, Future Positive Consulting
I find the challenge with growth is that so much is changing in the business, it is so easy to lose good people, but it is your staff who will drive your growth. To fail to constructively engage with your staff is to lose what I call their ‘discretionary potential’ – what they would bring to the table had you given them the opportunity. People are natural problem solvers, so they want to be involved and contribute.
There are eight key things to remember:
- Positive leadership: let people know how they fit into growth and how they will benefit.
- Clear expectations: outline what will change and what this will mean for people’s roles or the structure of the business.
- Information, tools and resources: if people aren’t properly equipped, they can become demoralised.
- Effective processes: everybody on the front line can use a simple tool, like root cause analysis, to continuously improve processes.
- Skills and knowledge: do they have what they need at the right time?
- Accountability: ensure there is someone taking an interest in employees.
- Regular constructive feedback: feedback is a process, and as the business is growing, people will have to grow in experience, confidence and range.
- Opportunity to discuss problems and ideas: this is the ability to discuss any of the above.
If you do these eight key things, people will see growth as an opportunity, and actively help their managers. If you miss out parts, you aren’t engaging with your staff, and you may struggle to deliver the levels of service required to capitalise on market opportunities.
4. Focus on customers
Colin Mason, Professor of Entrepreneurship (Management), Adam Smith Business School, University of Glasgow
What struck me from working with high-growth firms is how heterogeneous they are. They come from all sectors of the economy, not only technology. For many of them, their philosophy is to have a deep relationship with their customers, to understand and anticipate their needs, and to work closely with them. Several companies, particularly in manufacturing, sell themselves as solutions providers to their customers. They recognise that if they are only providing a product, there is a danger this would just become a commodity and then, they would have to compete on price. Instead, they wrap service around whatever products they are selling. This means they have on-going relationships with their customers and they have multiple revenue streams from their customers. This business model may not work for every sector, but it is applicable for B2B.
Businesses need to be customer-centric. What your business is going to do has to be based on a conversation with the customer. It has to come first, rather than your R&D lab deciding what to produce and then figuring out who will buy it. I did economics at university, and the most useful concept was ‘opportunity cost’: when you’ve used an hour in the day, you can’t have that hour back again. Businesses evolve, and you have to really think through your customer base. Do you want to focus more on certain customers? Who are your most profitable customers?