This Week@Work, Pavlo presented a series of workshops with business owners looking for scale and growth, of course! One of the big discussion points was who should lead that growth. As the business owner you’re the biggest investor in your business and growth inherently carries risk.
You need to be the one driving growth as you have everything to lose or gain from it.
When it comes to business growth, it’s important to shift our focus away from revenue and profit as mere indicators of success. Rather, revenue and profit should be seen as crucial triggers and indicators of change in a business’s development lifecycle. This is especially true if your goal is to build an asset, not just a job.
So, what are the criteria for building an asset? First and foremost, leadership plays a pivotal role in this regard. You need to understand what you want to achieve, why it matters, and how you can direct your resources to make it happen.
But how do you position growth within this framework? One way is to ask yourself the following questions: When should you pursue growth? Why is growth important to your business? What kind of business are you in? Let’s explore these questions in more detail.
Positioning Growth: When, Why, and What
Figuring out what business you’re in is essential for understanding how to grow. Take the example of Jack the Baker. Is he in the business of selling croissants or or providing a solution for fresh baked goods 356 days a year? Once you’ve determined the answer to this question, you can start to focus on the right kind of growth.
In this phase, revenue growth matters most, not profit
For businesses that are just starting out or looking to establish themselves, revenue growth should be the primary focus. It’s a crucial indicator of demand for your product or service and can help you build a solid foundation for profitability down the road.
Organic Growth: When, Why, and What
Organic growth is all about creating time to focus on growth without getting bogged down in daily operational activities. The goal is to achieve steady-state revenue growth that matches profit growth and tracks with it over time.
Accelerated Growth: When, Why, and What
Accelerated growth is all about dominating your positioning within a well-defined segment. This requires a strong understanding of your target market and a focus on profitability within that segment.
Next Level Growth: When, Why, and What?
Next level growth is all about de-risking your business by scaling profitability. It’s not just about profit quantum; it’s about ensuring that profitability is sustainable and that you’re not relying on one-time windfalls to achieve growth.
Capital Growth: When, Why, and What?
Capital growth is all about raising capital or looking to exit through a sale. It requires a focus on both profit volume (as a risk indicator) and profitability (as a growth indicator) to ensure that you’re building a strong, sustainable asset that’s attractive to investors.
When it comes to growth, it’s essential to understand the triggers and indicators that drive change in your business. Revenue and profit are crucial indicators of change, but they should be seen in the context of building a sustainable, scalable, and profitable asset. By positioning growth in this way, you can achieve long-term success and build a business that lasts.
This Week@Work Pavlo met with a large construction business who tried to smooth out their lumpy project based revenues by developing an out-of-the-box designer hut solution. Great idea, right? Then why hasn’t it worked?
Watch as he shares what went wrong and what we can learn from it about staying true to who we serve and how we serve them.
This Week@Work Pavlo met with a business owner who has a brilliant product that genuinely competes with the best in their industry. But a product only exists for one reason – to solve a problem for someone. The team and commercial system that allows people to find, use and want more of the product is the 2nd half the business.
Watch as Pavlo discusses this idea of 2 parts of a business.
This Week@Work Pavlo met with a business that is deeply entrenched in all things solar – a great sector to be in but their problem is that they have evolved to be everything to everyone. Their positioning is not clear, and they won’t be able to scale and grow until they get that right.
Pavlo looks to baked beans to illustrate how to think about your business’s positioning.
This Week@Work a meeting with a pump business reminded Pavlo how complex and complicated businesses can become as they grow. To be able to scale, successfully, you need to understand clearly where your focus and investment should go. To get this right, think about your business like an onion.
Watch as Pavlo shares the Onion Method.