Running a business is no piece of cake. Numerous problems pop-up when you’re trying to scale your business. From making petty to hardcore decisions; business concerns are never-ending.
As an entrepreneur, you’re here because you have already launched your business, effectively went through your product development, and may even be earning a handsome revenue, nonetheless, you wish to expand your operations and grow your business.
The Problem in Growing a Business
Not all businesses grow into the growth phase, and many shut down during the launch stage. Achieving growth is an important challenge that can hinder the growth of the business.
For a business, launch phase requires passing through to the launch phase requires solving problems and executing a host of activities such as getting traction, securing enough funds to survive the next three years, validation of the idea/product and perhaps the most important, getting the first thousand customers.
After a successful product launch phase, the game gets tougher as the business now has to concentrate on the challenge of growth that generally means multiplying every achievement of the launch phase by a factor of 10.
While growing the business several challenges may haunt you over and over again. More than that, businesses often face the problem of growth stagnation in which the growth of the business slows down for a significant period, and in worse cases, the business starts to show signs of decline.
At this point, it is important to discuss a common startup pitfall. Many startup owners immediately start thinking about growth. Instead, they should focus on scaling the business. Few startup owners understand the difference between scaling and growing a business. As such, you need to pick the right time to grow your business and invest your time, resources and finances into the project.
The Right Time to Grow Your Business
On one hand, there are shareholders who require the payment of their dividends and on the other hand, the managers need those funds to expand operations. This triggers a conflict between ownership and control, which is why you must be aware of the right time to expand the business.
Entrepreneurs often have difficulty in selecting the right time frame to expand the business in the context of growth. One of the most important things they need to understand that it is not all about money. Expansion is not always about having larger profits. It can also mean product innovation, enhanced experiences or feature development which can lead to increased customers and consequently increased revenues. There are signs that indicate the right time to grow the business. You should look out for these indicators and strike when the iron is hot!
In particular, the top indicators that business owners should look out for are:
1. Competitors are Scaling Their Game
Paying attention to your competitors is an essential business process that helps you refine your branding, innovate with new products and services, and secure talent more effectively. In essence, competitor intelligence opens doors to business expansion opportunities.
You might want to know the persona your competitors are working on, the improvements they have made to their product(s), the amount their latest startup funding round has generated for the business, and the changes they have made in their team.
If your competitors appear to be growing, there are opportunities in the industry for you to grow as well.
Tip: If your competitor is spending a lot on advertising, building a shiny new office space or buying new Bentleys for their executives, don’t confuse it with growth. There is always a chance that they are not considering their burn rate.
2. Increase in Demand
Another hint that it is time to grow your business is when your customers keep asking for more. If they are inquiring more about your products, asking you to open a franchise in their vicinity or upgrade a feature, it is time for you to expand operations and grow your business. However, you must research thoroughly before jumping on the expansion bandwagon.
For instance, consider the case of J-Dawgs, a hot dog vendor in Utah. The first store they opened was extremely successful. Hence, they decided to open another branch with the idea of doubling their profits. By now, they have seven franchises located at various hotspots. A simple rule of thumb: When your customers want more from your business, you must at all costs provide them what they want.
3. You Need a Bigger Space
If you constantly find yourself turning away customers due to lack of office/accommodation/fabrication space, you are ready for growing your business. This has the additional benefit of onboarding great talent to handle operations effectively.
Ask yourself, is your staff working in a tight space? If so, that’s the cue for expanding your operations.
However, before you lease out new space, you must ask yourself a few questions: Is there an increase in the seasonal demand? Do you have no other choice but to expand (because the expansion of business demands additional costs)? And, is your business capable of handling all the additional costs?
4. You can Explore a New Market
The ability to explore new markets is a luxury that businesses can only afford when they are ready to expand. In fact, this is a recommended practice to plan new market exploration before your current market flattens out.
As you can imagine, the ability to explore also gives you an edge over the competitors and can potentially generate additional revenue.
Now, remember, you need to increase your production capabilities to cater to the additional demand and supply for the new market. You will need to hire more employees who have the experience of working with the new type of customers you are looking to onboard. If you see that the expected returns are good, you should not hesitate in spending capital in this market.
5. Stagnant Growth
Contrary to the signs discussed above, stagnant growth is a negative sign. This situation can arise because of negative cash flow, lack of awareness and planning or poor marketing that couldn’t generate enough sales for the business.
This is a do-or-die situation in which you need to make quick but well thought out decisions to shift the growth curve upward. You need to identify the area and/or channel that is dragging your business down. Once you have actionable data, you need to take immediate action.
Why isn’t Your Business Growing?
Every product has a saturation point. If you go through the business life cycle, you will see accelerating growth in the beginning, and after a point, there is a staggering pause where the business growth either remain stagnant or worse, fall. At this time, if the business fails to innovate, the growth starts to decline and the situation becomes alarming.
At the saturation point, the growth stops as the business capacity maxes out. As a result, fear starts to creep into the enterprise.
What should business do next? Hire more people?
What risks are worth taking?
If your business is at this point, issues and obstacles can hinder the growth of the business. To help you understand some of the challenges that can cause stagnancy in your business, here are some things you should consider:
Lack of Vision
Entrepreneurs must have an idea of their business’s ultimate vision. Let’s say they wish to be a market leader in the next five years. The problem is that they generally don’t know how to break that vision into action items that bring them closer to their goal. As a result, the business suffers from:
- Lack of objectives
- Improper resource allocation
- Unclear organizational structure
- Hurdles in communication
If you don’t have a clear view of where you want to go, you will have a hard time getting there. Without having a clear picture, you won’t be able to set monthly, quarterly and annual goals.
“If you have a clear vision of where you would like your business to have expanded to after 10 years, plan how you can achieve this.”- Richard Branson
If you see unclear business goals, SWOT analysis may help you in understanding the current state and most importantly the opportunities you can exploit for growing the business.
No Data-driven Approach
It blows my mind to see entrepreneurs not caring enough to measure relevant metrics that play a vital role in growing their business. It’s saddening to see that they do not give data on the importance it deserves. Ask any business owner who has built a successful business from the ground up and you will discover that their intellectual vision demands collection and evaluation of a lot of numbers.
The problem here is either businessman don’t know what numbers they must collect and evaluate or they are unaware of where (and how) they can collect these numbers
Data is what helps you in making decisions. When it comes to both scaling and growing your business, data should lie at the center of every decision.
Now note that simply looking at the numbers and making decisions on the basis of these numbers are two different things. While the first is a simple activity, the second is an essential requirement for steady growth.
Not Enough Connections
The business world is all about social connections now. Businesses no longer work in isolation but in ecosystems where they thrive off each other. How is this relevant in helping businesses grow? Well, if as an entrepreneur you think you can do everything ‘by yourself’, you’re wrong.
Not having strong connections within the corporate world is an important reason for the lack of growth in today’s digital landscape. Not establishing mutually-beneficial relationships with entrepreneurs, affiliates and brands significantly reduce new growth opportunities.
These connections act as a catalyst for your business growth strategy and help you expand faster. A good way of setting up connections in the business world is by attending as many industry events and conferences as you can. During these events, you have a lot of opportunities for building healthy business connections with people who matter.
Not Spending Money Where You Should
The number one rule of any business is that you must spend money to make more money. You invest money so that you are able to double or triple your investment.
All businesses are short of cash in the beginning. However, product development and investing in appropriate growth opportunities are two areas where you need to continue investing to win in the long run. This can potentially hurt your business more than you can imagine.
Penny pinching could potentially cease your business growth and will cost you a lot more than what you have invested. When you see clear signs that you need more expertise, hire new talent. If you think you need to invest money in product development, do so. Opportunities for sponsoring industry events pop up time and again and you should evaluate the returns and invest for better ROI.
Do not be afraid to invest money in business growth opportunities. It is definitely a risk but those who do not take this risk are bound to fail.
How to Grow Your Business: Eight Potential Ways
Let’s assume you’ve finally reached the point where growing your business is your only option.
At this point, you need to be careful in your selection of strategies for growing your business. I suggest the following ways of growing the business:
1. Have a Futuristic Approach
Businesses grow when owners adapt to the changes happening in the environment. The constantly changing trends require entrepreneurs to have a futuristic approach and constantly work on innovating brand new ideas for products and services. Having such an approach to growth allows businesses to thrive and grab a larger market share.
Decide where your business is going to be after a certain number of years and all the objectives you need to achieve to get there. Also, think of the upcoming technologies you could integrate to remain relevant (in best cases, well ahead of the curve) in the face of future challenges.
2. Work With Experts
The ‘do it yourself’ attitude that helped you in the early stages might become counterproductive in the longer run. At this point, it is better to work with people who have a proven track record of growing businesses in your industry. These people can offer expert advice and services to help your business scale and grow.
Mentors and consultants know the right approach a business should follow in order to grow. They are in the best position to help businesses avoid the pitfalls and bottlenecks that can hinder business growth.
You really shouldn’t have any hesitation in approaching experts. If you are working with a VC firm, the investors can help you connect with the right people who are experts in a particular area.
On the other hand, if you are bootstrapping your business, you have to do a lot of searching around to discover and connect to the people who can mentor you and your team. Attending industry events, joining relevant online and offline communities is a convenient way of finding the right people for the growth stage.
Tip: When you have a mentor, try to be positive about their advice and be ready to implement what they say. Have faith in them but don’t let them take over your business. A balanced approach in this relationship is the key to success.
3. Optimize Sales & Marketing Channels
You need to know the current state of your business and the potential of each of your business channels.
Next, you should plan for the efforts for scaling individual channels to meet your revenue requirements. For example, you are getting 100K monthly traffic on your blog but the conversion rate is 3%. You can sense the opportunity of optimizing this channel for a better conversion rate. To set this in motion, you can publish more SEO and CRO optimized content with conversion-focused CTAs at appropriate locations.
When actively trying to grow, you would want to identify what kind of growth channels you have and do you need to create new channels to step up the pace. Additionally, you need t be sure that the channels you have selected (and added) are aligned with your objective of growth.
4. Product-Led growth
Product-led growth is the strategy where businesses have centralized their timeline, opportunities and expansion plans around their products. The pioneer of this futuristic approach is a VC firm called OpenView Venture Partners.
To understand this approach, let’s hear from Devon McDonald, Partner at OpenView Venture Partners as she explains this concept and gives several examples.
Another example I can give is that of Cloudways. We at Cloudways have been focusing on our product since the beginning and we can say it’s one of the top reasons why Cloudways has grown to be the market leader. With a continued focus on customer success, we have optimized our conversions through stronger prospect engagement.
5. Have a Customer-Centric Approach
If you are actively trying to search for ways to grow your business, you can start by becoming (more) customer-centric.
Did you know that around 60% of businesses that adopt the customer-centric approach tend to be more successful than the competition?
Now, what exactly is this approach? This approach is about understanding customers and their perspectives. Customer-centric brands envision their products to be user-friendly and customer-focused. This encourages businesses to come up with comprehensive solutions for their customers, identify their needs and cater to customer expectations and requirements.
As you can see, a customer-centric approach means providing value to your customers. Sustained application of this strategy results in the long term growth of your business.
Here’s an example of the application of this: After its launch, The team at Slack updated its product only on the basis of user feedback and suggestions. All they cared about was NPS of their product and they didn’t really run after the profits. You can see how this strategy has helped Slack to become the market leader in the communication and productivity software niche.
Sorry if this has been causing any problems, Luke. There’s no halfway between code-blocks and snippets right now unfortunately. We’ll take this on board as a feature request.
— Slack (@SlackHQ) February 20, 2019
6. Focus on Learning and Development
Businesses in today’s digital era can prosper if they invest in updating the skillset of their employees. Leaders who plan and promote the 70:20:10 rule within their organization can enable their team to achieve growth for the business.
The 70:20:10 rule states that employees learn 70% through on the job, 20% through learning from one another and 10% is learned through classroom training. Organizations that adopt this approach are better able to retain the talent, keep them motivated and enriched with brand new skills that help creative juices flowing in developing products and helping customers. Leaders that formulate a culture of learning and teamwork are better able to extract creative ideas from their employees.
Marty Richter, Corporate Communication Manager at AT&T stated, “We can’t depend on just hiring and the traditional educational system as sources for retooling or finding new talent. We need employees who are ready to work in a competitive and more digital world. We’re focused on aligning company leaders to strategic business innovation and results, skilling and reskilling our 280,000 employees and inspiring a culture of continuous learning.”
AT&T offers a learning program that not only focuses on developing managerial and leadership skills in employees but also helps participants accelerate their learning with their introduction of micro-degrees.
No business can ever grow if the management does not take risks and experiment. Experimentation in this context means trying out various strategies on a smaller scale – you may test products on a smaller audience to gauge the market response. Apart from testing and experimenting with products, businesses also experiment with technology and marketing ideas.
Why do businesses need to experiment? Business growth is directly linked to customer satisfaction. Introducing new products and services to their customers helps businesses realize the validity of market trends that businesses can leverage for sustained growth.
8. Develop the 10x Mindset
To grow, you need to think big.
The 10X mindset states that a business needs to be open about any opportunity that would act as a fuel for its growth and multiplies it by a factor of 10.
On the other hand, ignore or avoid all elements that become a blocker to the idea of 10x growth. It is all about the mindset that compels you to use all the tools and talents at your disposal to grow your business.
Marc Winn, Co-Founder of The Dandelion Foundation explains the difference: In simpler terms, our brain is designed just to recognize nice easy sequences of progression like 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. But technology just doesn’t improve that way. It improves exponentially – changing at an accelerating rate of 1, 2, 4, 8, 16, 32, 64, 128, 256, 512. These two paths are massively divergent, making it extremely difficult for us to predict and perform – unless we enforce a different way of thinking.
Every month or quarter you should identify barriers that are blocking you from achieving 10X growth and improvise on them.
Bringing it All Together
The interesting thing about Growth is the presence of both opportunities and challenges. Note that there is a notable difference between growing and scaling the business and you should be mindful of the difference.
When you have decided how to grow your business, you should see the challenges as stepping stones to increasing revenues, user base, and brand traction. The first challenge all businesses face is to determine whether they are ready for growth. Once this hurdle is over, the business could start concentrating on the problem of streamlining the growth process. At this point, there are several hurdles that can derail the process. In many cases, by following several actionable strategies, businesses can avoid the pitfalls and grow to greater levels of profitability and success.
If you would like to share your business growth strategy, do reach out to us through the comments sections.
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