How to Create A Small Business Growth Strategy
Starting and growing a business can be a daunting task. The numbers are grim - most small businesses end up failing. However, if you have a great idea and feel a strong entrepreneurial calling, this shouldn't stop you. Following your dreams is the only way to succeed - and there are steps you can take to reduce the risk of failing. One of the most important factors for getting your new business off the ground is creating the right foundation from the get-go. This means thinking about how to strategically approach every aspect of your business and having a strong plan in place.
So, let's take a dive into what aspiring entrepreneurs should do to create a growth strategy that will allow their business to survive and thrive where so many others fail.
Confirm There's a Market for Your Idea
Ideally, the first thing you'll do is conduct research to determine if your product or service will sell before you start taking any bigger steps. This may seem obvious, but you'd be surprised how many would-be business owners went all-in on unproven and untested ideas.
This initial market research phase should help you decide whether or not your business idea has a reasonable chance of succeeding. And that doesn't mean that you need to have a revolutionary idea. It simply means that there need to be enough people willing to spend money on your product or service in order to make it profitable.
It is good to start by surveying your industry to see what your main competitors are doing. See how successful they are and determine whether there are ways that you could improve upon or rethink the products or services they are offering. Offering a better product, cheaper and faster is always a winning proposition - but sometimes you'll have to decide which aspect to focus on.
Write Out Your Value Proposition
It's incredibly important to have a complete understanding of what your business offers to customers. This will allow you to communicate with your market why they should trust you with their money. A value proposition is a clear message that shows your prospects why they should pick you rather than your competitors and clarifies the benefits of your products or services in a concise manner
Important questions to ask yourself that will help you create your value proposition are:
What problems can you solve for your prospects?
What pain points of theirs can you remedy and help them overcome?
What does your product offer that differentiates you from your competitors?
When you can answer these questions clearly and concisely, then you will be ready to begin the process of pitching your products or services to the public.
If you try building up your business without a solid value proposition, you might have a hard time attracting clients and communicating your values to your team.
This means that it's worth it to put in the time to perform a careful, detailed analysis of your business characteristics, customer needs, and early customer reactions, assumptions, and preferences related to your business.
Define Your KPIs
It can be hard to gauge how well your business is doing. Revenue isn't the only number that's important, and solely focusing on earnings may lead to wrong conclusions. That's why you need to carefully define the KPIs (key performance indicators) that are important for your business. KPIs will give you a measurable way to determine how well your business is doing.
When you understand which areas of business are key to your growth and success, you will be able to dedicate the proper resources to these areas. Being able to represent your success in a measurable format will also enable you to adjust strategies and business processes and determine their impact.
Each business and industry will have its own unique set of KPIs, and you'll need to think carefully about what indicators you'll want to focus on. Using a sample KPI library from experts like Spider Strategies can help as a starting point as you can find multiple indicators for both department and industry metrics.
Let's break down the KPIs that most modern businesses will typically use to measure their success:
CAC Rate (Customer Acquisition Cost): In simple terms, this is how much you need to spend in total to get one new customer.
Lifetime Value of a Customer: How much you can expect to earn during your whole relationship with the customer.
Gross Profit Margin: The amount of earnings that remain when taking into consideration the funds spent to create and sell your product or service.
Burn Rate: The rate at which your company is going through its capital.
Keeping track of your KPIs should give you a very good idea of how your business is performing and whether or not your growth strategy is working.
Plan to Manage the Risk
Starting and running a business is risky. Like it or not, most small businesses are one disastrous claim away from financial ruin.
If you've been running your business for some time, then you probably already have basic policies such as general liability, workers compensation, and commercial property insurance. However, businesses that are looking to grow can expect to face new, more serious threats, which means that there is a new set of policies that need to be purchased. This is why your growth strategy should take into account how to best manage and transfer risk.
Consider How Quickly You Should Grow Your Team
Even though the point of a strong growth strategy is scaling and enabling exponential development, restraint is also a very big part of a successful growth strategy. Yes, your business needs to grow in order to survive, but that doesn't mean that you should go crazy, trying to expand your team. And while you do need to spend money in order to ensure growth and survival, you should still exercise caution. Having more people on the team doesn't always mean that things will get done faster; sometimes, the exact opposite occurs.
In many cases having a smaller, well-integrated team that understands the business and has good synergy will end up working out much better than hiring ten new employees.
Additionally, it would be best if you were wise with the benefits you offer. Spending large on payroll and offering a wide array of benefits is nice and will boost productivity - you probably should wait until the business has a strong foundation. Keep the spending focused on growth and try to restrict spending on items that don't appear to have a clear and certain return on investment.
It's important to understand that no strategy, no matter how carefully crafted, will be infallible. No one will be able to predict what will happen with your business completely. This means that you need to remain flexible and ready for the challenges ahead and move on to new strategies and ideas without dwelling on past mistakes.
Further Reading from Skills You Need
If you are thinking about running your own business, or already do so, but feel that you need some guidance, then this eBook is for you. It takes you through self-employment in easy steps, helping you to ensure that your business has more chance of success.
The Skills You Need Guide to Self-Employment and Running Your Own Business is the guide no new or aspiring entrepreneur can afford to be without!
Based on our popular self-employment and entrepreneurship content.
About the Author
Sean X Cummings is a marketing mastermind and agent of change. Sean has been looking into the future where brands, technology, and media intersect—and manipulating the present to get there. Sean is currently CMO at Embroker, a digital insurance company reinventing how businesses ensure they can take the risks they need to grow.