Maintaining status quo as a sustainable option is a risky strategy. Compared to your competitors, you’re either growing or you’re declining. Knowing why you want to grow is a critical first step in developing your plan — just be aware that growth for growth’s sake isn’t a recommended strategy. In this series, my focus is new customer/client attraction.
Thinking that growth automatically results in higher profitability is tempting, but it’s not necessarily true (think GM). While increasing profits is a great reason — and often a driver – for growth, there are other reasons to consider growing. Some of them might include:
- Building a stronger base and critical market mass for entity continuation.
- Increasing specialization to better meet customer/client needs.
- Expanding product/service offerings to become a full-service solution.
- Entering new geographic markets to build/expand competitive advantage.
- Increasing your opportunity to acquire competitors or as an exit strategy.
- Increasing opportunities for current and future staff.
- Increasing pay to help attract best talent.
As noted, increasing profits is a worthy pursuit. Even so, a balanced approach is advisable. Be mindful of Arthur Andersen’s infamous demise, which was set up by the company’s unreasonable focus on growth for the purpose of increasing profits.
When properly approached, strategic planning will define the “why” you want to grow, provide alignment for how to allocate resources, and focus your team’s efforts. However, this doesn’t mean you’re ready to engage in growth-oriented efforts. There are several fundamental questions you should consider before proceeding, such as:
- Are you scoring better than average, or perhaps even in the upper quartile, with existing customer/client satisfaction and profitability? The worst thing you can do is put your current customer/client base at risk due to the potential distraction of chasing new business.
- Who will lead the new business development? Are they truly empowered to make things happen, and do they have the time to devote to such an effort? This isn’t easy stuff to begin with, so not having the right team properly equipped is likely a doomed effort. (See my November 9, 2015, “What is a Hunter?” blog.)
- Are your systems (operations and administration) sufficient to respond to new business?
- Are you prepared to invest the additional money needed to ensure the effort has a sustainable opportunity for success? On this point, budgets/plans are always recommended to help define success, to set expectations (both your own and those of others), to provide a compass showing your current position, and to give you the opportunity to change directions when needed — which is inevitable.
If your responses to these questions aren’t clearly affirmative, it’s likely more work is needed in these areas, and proceeding without additional thought and planning could result in more harm than good.
Next post: Who We Are and Why We’re Here
Tom’s editorial comment: If, while you’re reading this series, you believe Dan could be helpful to your company, please contact him directly at [email protected], or 248-701-8787.