Elite Business: If your business is not growing, it’s dying!
In this article, first published in Elite Business, Pavlo Explores: Crafting a Strategic Growth Plan for Success in Today’s Economy.
Is your growth plan actually no plan at all? Or is it to sustain your value – neither is enough in this economy.
The Ukraine invasion, global supply chains, chip wars, trade ‘wars’, COVID hangovers, access to skills and grumpiness have heavily impacted our economy. Add inflation to a grumpy mood, and you, not the state of the economy, will kill your business if you allow it.
Let’s prevent that!
Plan to plan, but no plan yet.
If you are stuck here, you will develop an irreversible aversion to risk and a mindset that only sees risk and reasons not to act. A year back, I met the owner of a second-generation family business in the construction sector. He enjoyed a reliable £13m annual revenue, up and down a few percent for the decade preceding covid. Since then he has wanted to regain his revenues and dividend flows. Still, it remains talk, unable to commit to building a growth plan. Perhaps a decade of comfort atrophied the muscles needed to act amid his competitors enjoying record growth over the last 3 years.
Should this be you, sell your business before its value erodes further or act now. Here are two options.
Act to sustain your value.
In February, I met the owners of a once beautiful £21m revenue business. In response to the strain of their overheads bearing down on them, both partners dove back into operational sales. Spinning rolodexes, bouncing between their digital platforms, CRM and debtors book helped find, win and hold customers. It’s an exhausting and chaotic strategy, and they are reclaiming their £21m.
It’s not sustainable, and it’s not enough.
To maintain their 2019 value, they need growth to meet the corrosive elements of business value. They include:
Inflation – at 10,1% in March, robust inflation is likely to overstay its unwelcome visit. As business owners, we should look to open our upside and protect the downside so let’s expect the promised 2% target to arrive only three years from now.
Currency – our currency’s value is driven by relative inflation and belief. Technically, the gap between our inflation rate and that of our peers drives the relative depreciation of our currency. This gap runs around 4% at the moment. It is then either depreciated or compounded by the belief and trust in Britain’s ability to grow and attract investment.
Industry Growth Rate – Industry growth rates are, at best relative and as speculative as any revenue forecast a business owner presents to investors. Many factors weigh in on this number. For the benefit of a simple calculation, let’s assume that your industry is expected to grow at 2%.
Adding up the numbers, to maintain the value of their company, they need to grow their £21m by 16,1%.
After running these numbers, the mad flurry of activity undertaken by the founders paused. They boldly and purposefully replaced it with the following plan.
Plan to scale, grow and dominate segments in your industry
While 16.1% feels like a considerable number, scaling, growing, and dominating a few segments in your industry needs more. At least add another 3-5% to boldly set your year-on-year growth at a minimum of 20-23%.
A tough economy rewards companies that respond on the front foot ahead of the changed lived reality that their customers and clients face.
Start by revisiting which customer segments you wish to dominate and reset your product-market fit to meet the new experiences demanded by these customers. Next, articulate these experiences into your commercial activities, processes and systems. Done with your team, not alone, helps create accountability and enables effective delegation.
The result will be a simple, relevant, crisp strategy defined against a well-defined market segment. It will be a commercial system honed to service that market, empowered and led by a purposeful team. It will generate organic growth and resuscitate the value and dividend stream you once enjoyed. Valuably, it will release your time to lead the 20-30% that this economy offers.
Yup, I know, I said 20%. However, done this way, 30% year-on-year growth is likely, so why not!