Governments, Banks, Investors… they all yearn to know the secret that turns companies from steady state to fast growth.
Break Through to Fast Growth
Posted on 2nd May, 2016 in General
Governments, Banks, Investors… they all yearn to know the secret that turns companies from steady state to fast growth – a beguilingly small proportion of all businesses that have a disproportionate impact on global wealth creation and employment levels.
Spotting the gazelles and backing them is the stuff of dreams but is remarkably difficult to do because of the cocktail of ingredients that contribute.
Typically though, the successful menu can be boiled down to just 7 key areas, albeit each one requires a lot of thought to implement effectively.
The Fast Growth Cocktail
1. A Growth Strategy. Now you shouldn’t be looking for “War and Peace” but more a plan that specifically identifies a clear target market and identifiable problems that your product or service is going to resolve. At South West Growth Service, we often use a lean or business canvas as the first best step in helping aspiring fast growth companies identify the key next steps. Contact us and we will help you put one together. The growth strategy needs to build on the demonstrable fit of your solution to the business problem and expand it to a wider market. Sound simple? It isn’t.
2. The Right Stuff. Often a shock for the founder but they are often the block for the business making the step change required. Enlightened leaders assemble a team which have a shared mindset that is committed to growth. There is no blueprint for the types of people that make the best growth entrepreneurs, although alongside technical competence, resilience, a willingness to accept risk and a real focus on the customer are key.
3. Plumbing before poetry. From day one you need to avoid the creation of bespoke processes that are difficult to replicate and likely to result in rework, errors and what process improvement experts call “waste”. In scaling up, scarce resources need to be focused on maximising throughput, ultimately generating cash for reinvestment. Consider outsourcing activities that you are not able to complete efficiently yourselves.
4. Customer obsession. The small things can make the biggest difference. In developing the product/service, you need to be sure that the users value every element, otherwise you are wasting resources.. Changes should be made through customer approval – so you must have an intimate understanding of what they want.
5. Measure the right things. In moving to scale-up, unfortunately for the bankers and accountants out there, traditional measures like profit and return on investment are not that helpful. You want a product or service that is gaining traction and interest with early adopters and your measures will best focus on indicators that reflect the acquisition, activation, and retention experience. It’s also worth remembering Mark Zuckerberg’s reminder of why he developed Facebook:
“We built it and we didn’t expect it to be a company, we were just building this because we thought it was awesome”.
6. Extracting value. It’s one thing to have a product that customers like or even love, it’s another entirely getting them to pay for it. Monetising value from users is a key part of the product development. Testing the market’s appetite needs to assess the products’ unique value compared to alternatives. Consider this: if you doubled the price and lost less than half the customers, then your business will be ahead. Equally price the product or service considering its “life time value”, encouraging multiple purchases over many years.
7. Fuel for the fire. Once the initial concept has shown to be proven, it will be mission critical to access additional finance to help scale the business. It is very rare for fast growth businesses to achieve scale without external funding. Funding can be essential to take the initial concept to production, produce on a larger scale, hire additional capability, or support marketing activity. In the last 10 years finance has gone through a quiet revolution with more choices than ever.
South West Growth Service works with businesses that are looking to achieve a breakthrough to growth. For more information contact Chris Lorimer at [email protected] or through the South West Growth Service website