Business Planning for Growth

Business Planning for Growth

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January 9, 2016

Business planning for growth is not simply a one-off activity, nor is it a templated chore to be grudgingly completed once a year or when external finance is needed. No, your planning should follow the same cycle of development as your business and possibly the first major transition in emphasis is when you move from planning a startup to planning a growing concern.

Once your product or service has been introduced, it is heading toward the growth stage – a critical period in which you aim to consolidate your market position, boost sales and improve profit margins. However, there are a number of challenges associated with the growth stage which must be factored into your planning:

  • More competition.By this stage you are not feeling so unique. Either others have seen the potential in the niche you’ve opened up or you’re simply beginning to understand the true extent of your rivals – you
    now have to consider a more crowded marketplace.
  • Prices dropping.When looking to increase sales/clients (and with the increased competition in mind) you may need to reduce your prices to achieve the hoped-for growth.
  • A change of marketing emphasis.Your introductory marketing strategy saw a focus on the newness of your offering but now you’re established you need a subtler approach to continue to push your product or service.

Faced with these challenges, you might be tempted to stay small. Growth? Who needs it? But if you stand still, eventually your business will stagnate and customers will be tempted away by newer and shinier offerings. Luckily, if you need an incentive, the growth stage also carries benefits:

  • Lower costs.Starting up is usually the most expensive part of the product/service life cycle. In the growth stage, your development costs are behind you and as demand for (and sales of) your products and services grows you can reduce overheads by taking advantage of the economies of scale.
  • Higher profile.As your marketing strategy focuses on growth, more customers and clients become aware of what you have to offer. Consequently, your potential market is increasing and with it, sales.
  • Profits are up.Lower costs plus increased sales equals increased profits.

One way to start identifying your growth opportunities is to categorize them according to whether they involve new or existing customers and new or existing products. The simplest to plan for is selling existing products or services to existing customers: relatively easy in terms of time, effort, resources, investment, etc. At the other end of the spectrum is selling a new offering to new customers; much more costly and possibly requiring capital investment for research & development and marketing. The other two combinations (new products to existing customers, and existing products to new customers) fall somewhere between the two in terms of cost.

So, in terms of quick wins, targeting existing customers with your existing product or service is the low-cost and more immediate option. However, you need a longer-term strategy that covers the other directions and those may require fresh investment; which is where a compelling growth plan comes in. A startup business plan includes a number of standard sections – executive summary, overview, products/services, marketing, success measures, people, financials – and is focused on enticing investors to join you in a new venture. The goal of a growth plan may be similar (the garnering of investment capital) but there are some key differences of emphasis:

  • Rather than how you will achieve success, focus on how you will repeat your previous successes.
  • Growth is about laying the foundations of longevity and as such any plan must outline the ongoing financial and operating standards and the implementation of consistent policies and procedures.
  • Research and development is now less important than a clear direction for rollout and expansion.
  • Operational details – staffing, sales, marketing and production – are important.
  • Finances should no longer be inspired estimates, but instead based on your results so far (and as such, be much more credible), including facts and figures for overheads, expenses, customer accounts, and so on. The growth stage: time to get real, time to grow.
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