How To Develop Business Growth Strategy – Contrary to what many people believe, a comprehensive growth strategy is not just about getting more customers and selling more products. I mean, getting clients is very important but there’s a lot more to it
If that’s what you’re looking for, learning about different ways to target more customers and expand your existing business, I recommend a free copy of my book a download.
How To Develop Business Growth Strategy
, where I explain how established businesses and startups are leveraging artificial intelligence and other technologies in their retail context.
What Strategies Can Increase Your Business Success
But if you’re looking for a comprehensive strategic growth plan, you’re on the right page, so read on.
As we explain in our Business Strategy Principles, the first order of business for any executive is to have a core business under control, which means the products and services of the business the market position that is both profitable and profitable.
Once you achieve this, you can shift your focus to growth and start thinking of different ways to increase the value of your business in the future.
In an ideal world, we would expect executives to only go after growth initiatives that benefit their organization, but in reality, we have all seen that misaligned demands and incentives can -shares and company investors to bring down sometimes. The growth continued
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In general, we say that a growth strategy is broad if a combination of the following conditions are met:
For that reason, you must always take into account the “costs” (both financial and non-financial) of your growth efforts and how sustainable you expect these efforts to be in the long run. time
In this article, we explore the different ways you can grow any business and offer some ideas to help you create your growth plan. Here are some of the things we will cover:
We’ve included some tables, links, and other references to help you understand what a good growth strategy is. We’ve also created a mind map with the growing options we cover so you can download it and take notes as you go through this article.
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This mind map is also a visual representation of the strategic choices you as a business executive must make when developing a new operational strategy.
) or “free cash flow” (usually just referred to as FCF), concepts we review in more detail in our Financial Analysis section.
Your job as a business executive is to analyze how this list applies to your organization and make informed decisions about which routes will have the greatest impact on your bottom line. .
The core of your growth strategy is your handpicked collection of paths, which, together with your strategic positioning plan and execution system, is what you need to succeed in creating and implementing your organization’s strategy.
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Although a growth strategy can usually be described as a group of business initiatives aimed at increasing a company’s bottom line, I prefer to talk in terms of an action plan.
Organizational growth, which includes the steps the executive team chooses to increase value in the future
Not all growth paths have the same effect on a business and for that reason, you need to take the universe of steps.
Go for the bunch that will have the most impact in a given time with minimal effort and resources
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This is why your plan for growth must be strategic, because ultimately, no company has unlimited resources or management bandwidth at its disposal, so you will spend attention and facilities. .
This translates into a growth plan that works, strives to grow better, and find new ways to create value, leading to a fair and balanced approach to growth.
I have also found this classification useful in defining sources of growth in executive meetings and making better resource allocation decisions.
But beyond categorizing growth opportunities, a more fundamental issue you often face is the actual selection of growth initiatives on which to focus your energies.
How To Develop A Business Growth Strategy
The best way to start growth planning is by assessing the growth “gaps” we need to fill in the new business.
For example, let’s say you are planning your strategy for the next five years and your goal is to grow 15 percent a year. If your operating businesses are expected to generate $100 million in net income this year, and you expect them to grow at a rate of 9 percent annually, you can easily calculate the type of income your new business needs to generate each year. .
Having an indicator number for the employment gap will help you better understand the type of growth you need to pursue.
For example, in the case above you would know that the growth strategy you choose should be such that they can deliver $47 million in net income by the end of five years, which you help to prioritize and simplify their selection.
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A good way to brainstorm the steps that can be followed is to go through each of the growth paths we mentioned earlier, asking simple questions like:
Ideas that show the most potential can then be used, to better understand the type of benefits they generate, the level of investment required, the partnerships and capabilities to be developed. construction, etc.
There is no perfect approach to selecting strategic growth opportunities because the selection must meet a company’s various preferences (including output) and meet current strategic goals.
Our recommendation is to select the most important investment parameters for your company (such as net income, required investment, return, inventory option or just for strategic reasons), then “fill the growth gap” by starting with the steps you commit to working on. . Better in these limits until the gap closes
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In an ideal situation, you’ll have a balanced growth strategy across McKinsey’s three buckets (expand, create, and optimize), but in reality, you’ll end up with a strong bias toward one sector specific, based on. Current strategic goals, which are well within our knowledge
The next step is to work on your 5-year template which is the subject of the next section
The mindset, where you try to maximize the value that the portfolio generates over time, usually five years.
It gives you a 5-year growth template, which helps you balance efforts between different business units and make better capital allocation decisions.
Pdf) A Study On Strategic Business Growth (case Study)
It is always a risk to put all your eggs in one basket, and while it is true that many companies have won big bets on new products and technologies, there is a difference between bet “big” on growth initiatives and bet “all”.
Your growth initiatives across multiple markets, business units or products that may be launched at different times in the future
By creating a map like this, you can easily keep track of all the opportunities in your pipeline, better balancing resources in each of them.
If you can’t tell how each effort contributes to your company’s growth, you won’t be able to get the most out of them You know, when Peter Drucker said that “
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If you understand how each business unit, product, or optimization test contributes to your company’s growth, you can double down on what’s working, focus on what’s not, and find opportunities for improvement.
, created by Michael Tracy and Jim Sim that allows you to create a beautiful waterfall that shows how your income breaks down over time, which is very useful for redistributing growth efforts and resources.
We describe this tool in detail in the book where we provide a step-by-step process for creating a waterfall
You can do the same breakdown for profit or net income if you have enough information to allocate expenses and verify some accounts, but this sales statement can give us a good starting point to understand where our profit coming.
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Mind, where you seek the strategic growth that the portfolio will generate over time.
This will help you balance efforts between different business units and make better capital allocation decisions that lead to a better growth strategy.
You can do this by placing business units in a four by four matrix based on their competitiveness and the strategic growth potential of their markets.
Introduced in the early days by the Boston Consulting Group (BCG), where we use competitiveness and market potential as proxies for prime size.
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Following BCG’s nomenclature convention for each quadrant, we can define each business unit as one of:
To determine where each business fits in the matrix, you can assess its competitiveness based on its ability to maintain a profitable position.