This is the third in a series of blog posts.
Small businesses are often formed because the owner has a good new idea. If the idea has legs, then the business grows to a reasonable but fixed level of revenue, and then begins to flatten out. Established data tells us that only half of small businesses survive more than five years, and further decays continue over time. There are a host of reasons for this, but in general, the reasons are similar to why mid-level and large firms stagnate. There are five success drivers that are the most crucial to small business survival:
- Fact-based decision making
- Growth planning
- Ongoing innovation
- Inward focus
- Simplified work processes
In my last blog post, I discussed fact-based decision making. In this blog post, I will expand on growth planning.
A Well Thought-Out Growth Plan
Assuming one of those factors defined is primarily focused on the growth engine, it is critical to establish an operational growth plan. Most growth plans fail because they use worn-out approaches, take too much time to generate, and are not based on facts. Real growth planning identifies the factors that initiate growth, the factors that prevent growth, and how the potential customers or markets fit into those factors.
Growth planning does not need to be tedious or elaborate. Don’t start with financial targets; they are lag metrics or the result of acting on the real drivers. Instead, you need a sense of how acting on the few growth drivers results in financial growth, keeping reality in mind. The three most crucial growth drivers are
- Customers: the number of customers who will buy your product or use your service
- Value proposition: what new or improved products or services must be generated to attract more customers and increase sales revenue
- Quality resources: what resources you need to act on your plan and how capable they are to do that
These three crucial growth drivers should be the core of your personal investment. We will discuss these drivers further in future blog posts.
“There are not enough hours in the day or days in the week to do all that alone,” you say.
One solution is to find a variable cost “coach” who is skilled at this type of planning and knows your business and markets. Use them sparingly with a results-oriented metric to both leverage your time and prevent throwing money down a sinkhole.
If you want to discuss any of these elements now prior to a future blog, leave a comment below or contact me.