Every business wants to grow, but as every business owner knows, it is easier said than done! Both the Genus team at SHORTS and our friends at Lucidity are ardent advocates for developing smart business strategies that help your company grow in a sustainable way.
This blog will introduce you to advanced growth planning and execution for your business.
The following information, and additional context, commentary and analysis, can be seen by watching our recent Webinar on business growth strategy.
What does SWOT tell you about your business?
The chances are you are already familiar with SWOT analysis.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis is a technique for assessing these four key areas of your business. This should be the bedrock of any growth strategy – but it must be approached in a detailed, honest, and realistic way to succeed.
- What are your genuine strengths? Remove any vanity factors from this and consider your company’s strengths as objectively as possible.
- What are your honest weaknesses? Do not try and sugar coat legitimate weaknesses or try to position weaknesses as strengths.
- What opportunities are there? Is this representative of the market, or does it just apply to your organisation?
- What are the biggest threats? Have you considered all possible challenges/challengers, both now and in the short-and long-term future?
What do you want to achieve?
Consider SMART objectives. Much like a SWOT analysis, you may already be familiar with SMART objectives, which are specific, measurable, achievable (or sometimes ‘agreed’), realistic (sometimes ‘relevant) and time-bound.
But, like SWOT, this fundamental model is vitally important, no matter how ambitious your strategic vision is.
When setting your objectives, remember an objective is not a strategy, nor is it a tactic. For instance, “growing Facebook reach” by 10% is not an objective, but a tactic.
Here are some examples of SMART strategic objectives:
- Get back to breakeven by 31 March 2021.
- Grow sales by 5% by 31 May 2021.
- Grow market share by 10% by 30 September 2021.
How do you achieve these objectives?
Once your objectives are set, you need to formulate a strategy that is going to help you achieve them. For this, it is very important that you do not put all your eggs in one basket.
Ideally, you should come up with three alternative strategies with the same strategic objectives in mind.
This allows you to approach the challenge from different directions. There will often be more than one successful approach to meeting any objective. You should carefully appraise each of these options, as objectively as possible before making your decision.
Ansoff’s Growth Matrix
Ansoff’s Growth Matrix is a simple but very useful framework that helps you identify business growth strategies, with multiple approaches and risk levels. This includes the following areas.
|Strategy Type||What it means||Risk level|
|Market Penetration||This is where you are looking to provide the same product or service (potentially with modifications) to roughly the same audience, but with more penetration within the segment||LOW|
|Market Development||This is where you take the same product or service to a new sector. A common example of this is exporting goods and services to an overseas market.||MEDIUM|
|Product Development||If you have a good relationship with your customers and they trust your brand, you may offer new products and services to the same customers. Examples of this in practice include Sainsburys Bank and UberEATS.||MEDIUM|
|Diversification||This combines new market developments with new products or services.||HIGH|
Evaluating your strategic options with SAFe analysis
SAFe analysis helps you evaluate your strategic options based on their suitability, acceptability, and feasibility. With a SAFe analysis, you can rank, appraise, rate and evaluate your strategy in the context of your organization and its objectives.
So, what does this mean in practice?
You can make decision making easier by giving each strategy a score for each category, such as from 1-5. This gives a maximum score of 15 per strategy. The strategy with the highest score may be the most suitable.
You may also find that one strategy benefits the short term of the business (such as improved market penetration) while one may benefit the longer term (product or market development).
The latter may require investment in products or brand development, which may take time. You could therefore deploy more than one suitable strategy this way.
What does a growth strategy look like?
When considering a growth strategy, we recommend thinking in three-year terms rather than 12-month periods.
Your Strategy Vision should contain a few core Strategic Objectives. This is a handful of top-level things you need to happen to make your Strategic Vision a reality.
Best practice is to have between 3-6 Strategic Objectives. Having fewer than 3 suggests you haven’t explored all potentials, while having more than 6-7 means you’re probably trying to do too much at once.
Each of these strategic objectives has a few goals and KPIs, and each of these goals can be broken down into individual tasks.
This can be visualised clearly and effectively using the following diagram.
What are typical strategic objectives?
A typical strategic objective will cover the following areas:
For best practice you should aim for your objectives to cover 3-6 of these areas.
These will be the big areas of focus and achievement for the next few years. You should call them something interesting and motivating, like Financial Growth, Fantastic Service, Operational Excellence, or Inspired Team, depending on the context of these objectives, who they involve and who they benefit.
These are the Strategic Objectives that support your Strategic Vision. But what do these look like?
For the Financial Growth strategic objective, your goals could be:
- Increase revenue to £3m.
- Attain profitability of at least 25% across product range.
- Grow market share to over 40% by March 2021.
Setting Strategic Business Goals
Another good practice is for your strategic business goals to be clear and concise, with numbers, timings, deadlines, and owners. There are no prizes for the most complex strategies – simple and easy to understand is usually best.
Examples of good strategic goals include:
- £15m turnover by 2025
- Be named a Times Top 10 SME 2022
- 75% of revenue recurring from products by 2025.
- Invest 3% of revenue in developing people per annum.
Examples of bad strategic goals include:
- “Develop pipeline of services work”.
- “Marketing plan”
- “Grow sales”.
Poorer strategic goals are vague, ambiguous, with unclear timings, unclear targets, and fewer numbers. A better way of setting out “Grow Sales” as a strategic goal would be to say, “grow sales by X% by year Y”. This is clear, tangible and can be owned by someone in your team.
Why do business growth strategies fail?
There are several reasons why business growth strategies can fail, and these fall into three key areas:
How to make a business growth strategy successful
Need help growing your business? Genus can help
The Genus team at SHORTs offers businesses insightful advice, integrated planning solutions and meaningful management information.
Genus tailors specific solutions for your business, crafted together from a range of the world’s leading software packages and recognises that, as businesses grow and develop, the level of support they need increases.
Get in touch with Genus today and see how the team can help you develop a growth strategy that is clear, effective, and sustainable.
Gain a competitive advantage with the latest business strategy software from Lucidity
Lucidity is a software platform that you can use to help you better understand your market, build and execute a smart and sustainable business strategy, align your team to strategic goals and monitor progress against KPIs and SMART targets.
Get in touch with the team at Lucidity today to see how they can help.