Turning a startup into a million-dollar company isn’t an easy task.
Research shows that only 1% of companies reach $250 in annual sales. Worst even, only a microscopic group—0.036% to be precise—will reach $1 billion in annual revenue.
In other words, most businesses start small and remain there.
But that doesn’t mean you can’t ace it. There are many companies that started small and have transitioned to multi-million-dollar conglomerates. Meaning you don’t need a billion-dollar balance sheet to expand and achieve a significant market share globally.
What you need is an unstoppable strategic growth plan. Of course, with growth comes risks.
Companies on a growth trajectory face many challenges that suppress their growth. Without a well-defined growth plan, your business may never reach the maturity stage. Instead, it may end up joining the growing number of companies that fail within the first five years.
But how do you build a strategic growth plan for your business?
In this guide, we’ll discuss the steps to developing a strategic growth plan for your business. We’ll also touch on the many challenges leaders face trying to grow and how you can avoid them. But, first, a quick primer on strategic growth.
What Is Strategic Growth?
Growth for the sake of growth or making a profit isn’t sustainable.
You’ve probably heard horror stories of companies that started big, flush with venture capital, but got sloppy at some point and began dwindling. Rapid growth can lead to unforeseen circumstances, such as:
- Poor hiring decisions and high employee churn
- Communication problems
- Poor targeting and marketing penetration decisions
- Data silos and poorly placed technologies
- Lack of analytical decision making
- Overhead accumulation
Having a strategic growth plan can help avoid all these problems. A strategic growth plan is like a blueprint—a big picture you’ve created to get your business from where it is now to where you want it in the future.
Such growth involves all departments and aims to grow your company from many angles (revenue, employees, etc.).
In other words, strategic growth involves developing initiatives that will help your business grow long-term. That said, any growth strategy intended for the short term, like growing sales by 10% in the next two weeks, is not strategic.
Examples of strategic growth include forging partnerships that will foster future growth or diversification, developing new products to reach a wider audience, etc.
How to Build a Successful Strategic Growth Plan
Building a successful growth strategy requires careful consideration of the many factors that impact business performance. Here are the steps to follow before you lay down your strategic growth blueprint.
- Identify Your Value Proposition
The first step in formulating your growth strategy is to figure out what makes you different from the competition. Consider why customers come to you and what features of your products make them stick with your brand.
Ask yourself what makes you relevant, unique, and credible. Then use your answers to formulate a growth strategy to factor in your value proposition.
For example, some companies, like LG, boast authority and dominance with their OLED TV lineup. Others, like Walmart, compete on price. Figure out what differentiates you from the competition and capitalize on that in your growth prospects.
- Identify Your Target Audience
While selling to everyone might seem more profitable, things can be very different on the ground. Businesses that identify a target market and niche outperform those that sell to everyone. Your goal is to solve a problem for a specific audience.
Who is that audience?
Once you’ve identified your target audience, it will be easier to understand their pain points and develop products that address their needs. If you don’t understand your audience, you may end up spending marketing and advertising dollars on a market that’s not lucrative.
- Understand Your Current Revenue Streams
What are your revenue streams? Do they generate enough revenue to finance your future growth projects? Are there more revenue streams you can add to make your business sustainable? Answering these questions will help you determine whether you’re ready for the next phase of your business growth.
- Conduct a Competitive Market Analysis
Take a closer look at companies that are in the same business as you and similar businesses that are growing in unique ways.
Find out what they’re doing differently and whether they have a larger market share than you. If they’re performing better than you, brainstorm what you can do to improve on their offerings and achieve a larger market share. Incorporate your ideas into your strategic plan but don’t implement any until you’ve tested them.
- Do a Market Research
Market research will help you determine the feasibility of your future projects.
At this point, you should aim to determine the size of your market and target audience.
Seek to identify gaps in the market and devise ways to penetrate other untapped segments. Your research should also look into businesses you might want to forge partnerships with. These partnerships can be a bigger part of your strategic growth plan.
- Set Goals
Once you have done market research and devised your growth strategies, the next step is to determine how much you plan to grow.
Strategic growth isn’t achieved overnight. You’ll want to set sustainable goals and make sure you have the means and resources to get there. The goals you set should depend on how much you want your business to expand.
- Create a Plan
The next step is to create a detailed plan for your growth strategy.
Your plan should include:
- The resources you need to achieve your goals
- The team responsible for making the plan successful
- The action items your team needs
- Growth strategies to be implemented
- Products to be developed/introduced
- Target market to reach or expand to
- Means for measuring progress and growth
It’s advisable to form a committee that will oversee the implementation of your plan.
- Consider Hiring More Employees
The best growth strategy involves onboarding new employees to handle the increased workload. You’ll also want to invest in upscaling your sales team skills and infrastructure. If your CRM isn’t built to scale, consider changing to a platform that’s flexible and scalable.
- Determine the Requirements for Growth
The final step in your growth strategy is to determine whether you have the resources that will make it possible for you to expand and meet your growth goals. Some of the growth resources you need will include:
- Personnel (skilled and unskilled)
If you have everything you need to scale, give it a go. Make sure to set growth milestones and review your progress in each milestone.
What are the Challenges Leaders Face When Trying to Grow?
As mentioned, your strategic growth journey will be met with many challenges. Typical challenges leaders face in this journey include:
- Managing Change
Humans are, by nature, resistant to change.
This often happens due to the fear of the unknown. For this reason, leaders often find it difficult to help employees adapt to the new changes.
When a company is planning to expand, it will likely introduce new systems and working models that might threaten employees’ job security. It’s critical to consider your employees’ feelings and assure them that the change will not threaten their job security but rather simplify their workflow.
- Demands of a Growing Workforce
As mentioned, the best growth strategy involves onboarding new employees to handle the increased workload.
The caveat to this is that leaders often encounter challenges meeting the demand of a growing workforce. Bringing in more recruits can help with workload management but also present a number of challenges, such as complex HR administration.
Plus, dealing with people can be complicated. The higher the number of employees, the more challenges you’ll encounter managing them and solving disputes.
- Managing Cash Flow
Cash flow management is critical for the success of your business.
Cash constraints can be detrimental to the success of your growth strategy. When a company expands rapidly, its operations become highly cash-sensitive. Leaders and departmental heads have to make sure the company has enough resources to finance the ongoing projects.
In the event of insufficient funds, the management may need to look for alternative sourcing to finance the ongoing expansion projects.
To ensure proper management of cash flows, every element of working capital should be scrutinized to ensure no cash is going to waste or non-profitable uses. It’s the duty of the leaders to plan ahead to anticipate any financing needs and arrange suitable funding.
- Satisfying Existing Markets while Expanding to New Ones
As much as expanding to new markets is beneficial to a business, satisfying the existing customers should not be neglected.
Leaders often encounter challenges maintaining this balance, particularly if the newer markets have better growth potential. Plus, acquiring new clients is more expensive than marketing to existing customers.
If a business capitalizes its efforts on acquiring new clients at the expense of marketing to the existing customers, it may end up incurring higher costs in the long run, which could have been avoided by satisfying existing clients.
The Bottom Line
The success of any business depends on how well it executes its strategic plan. By following the steps discussed above and overcoming the common hurdles leaders face when implementing strategic plans, you’ll be a step close to reaching your growth goals.