Achieving Sustainable Growth
Comprehensive guide to how to grow your small business
successfully and sustainably.
Achieving Sustainable Growth
Table of Contents
Introduction..................................................................
Achieving Sustainable Growth

Introduction
There has been much debate among business commentators
whether the theory that ...
Achieving Sustainable Growth

Planning For Growth
Your business plan should be the key driver in all of your growth planni...
Achieving Sustainable Growth

Measuring Performance
If you want to grow, you have to understand your business.
Understandi...
Achieving Sustainable Growth

Analysing Your Business
When choosing the correct growth strategy it is important to underst...
Achieving Sustainable Growth

Analysing Your Business
Let's go deeper into SWOT Analysis
S - Strengths
After analysing act...
Achieving Sustainable Growth

Analysing Your Business
Pestle Analysis
PESTLE analysis is a tool to analyze the
socio-econo...
Achieving Sustainable Growth

Analysing Your Business
Porters Five Forces
Porters 5 forces looks at the
potential threats ...
Achieving Sustainable Growth

Choosing The Correct Growth Strategy

Choosing the correct growth
strategy is crucial to you...
Achieving Sustainable Growth

Growth Strategies
1. Open up in a new location

4. Form an Alliance

If your business is doi...
Achieving Sustainable Growth

Growth Strategies
7. Merge with another or buy

9.Increased Marketing

If you want to grow y...
Achieving Sustainable Growth

Implementing a Growth Strategy
Once you have decided the correct growth strategy in place yo...
Achieving Sustainable Growth

Managing Growth
To manage your growth plan effectively you need to:
1.
2.
3.
4.

5.
6.

Trac...
Achieving Sustainable Growth

Conclusion
Growing a business is not easy, it requires funding, detailed
planning and monito...
Achieving Sustainable Growth

About Us
We focus on helping small businesses achieve better results
through business planni...
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Achieving Sustainable Business Growth

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This white paper will provide small-business owners with a clear understanding of what they should to do in order achieve sustainable growth in their business.

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Transcript of "Achieving Sustainable Business Growth"

  1. 1. Achieving Sustainable Growth Comprehensive guide to how to grow your small business successfully and sustainably.
  2. 2. Achieving Sustainable Growth Table of Contents Introduction..............................................................................Page 3 Planning for Growth..............................................................Page 4 Measuring Performance......................................................Page 5 Analysing Your Business.......................................................Page 6 Choosing The Correct Growth Strategy.......................Page 10 Implementing a Growth Strategy....................................Page 13 Managing Growth...................................................................Page 14 Conclusion..................................................................................Page 15 Page 2
  3. 3. Achieving Sustainable Growth Introduction There has been much debate among business commentators whether the theory that a business must ‘grow or die’ is true. While the phrase has some merit, it does not quite fit every business type. There is a strong argument to suggest the phrase should be modified to say businesses should "improve or die." Entrepreneurs are ambitious people, and it is in their nature to strive to grow their business quickly. Despite the willingness and the ambition to grow, few businesses do this in an effective and sustainable manner. When you analyse the business failure rates, it is interesting to find out that many businesses that close are growing and hitting their sales targets. However, the growth achieved was uncontrolled and resulted in the business overspending and/or not collecting all the cash they were due. In these circumstances growth was the reason for business failure. This white paper will provide small-business owners with a clear understanding of what they should to do in order achieve sustainable growth in their business. Key Elements of Sustainable Growth ● ● ● ● ● Business Planning Business Analysis Choosing The Correct Growth Strategy Implementation of the Strategy Growth Management Page 3
  4. 4. Achieving Sustainable Growth Planning For Growth Your business plan should be the key driver in all of your growth planning. It contains your revenue expectations, marketing plan and sales plan. Your business plan should help you understand exactly what you need to do operationally in order to grow. Targets will be set for your marketing campaigns, sales conversions and spending. It is also very important to set targets for specific metrics that will help you understand your business and measure the success of your growth plans. Below are some of the key performance indicators KPIs you should set targets for in your business plan then review performance against. ● ● ● ● ● ● ● ● ● ● Customer Acquisition Cost (CAC) Average Customer Spend Customer Retention % Attrition Rate % Referral Rate Sales Revenue Gross Margin% Net Margin % Overhead to Revenue % Variable Cost % Ideally a business plan should be a “live” document that is updated on a monthly basis or when you have identified a significant change in the plan. Page 4
  5. 5. Achieving Sustainable Growth Measuring Performance If you want to grow, you have to understand your business. Understanding daily operations is not enough, to understand your business you need to know the areas that it does well and the departments that require improvement. Understanding your business also means you are aware of market, how strong it is and where it is going. You should also monitor the performance and strategy of your competitors. Regular reviews of the metrics laid out in the business plan provides a business owner with insight to the strengths and weaknesses within the business and allows them to make informed business decisions. Regular performance reviews provide you with the knowledge to improve your business. You should act quickly on the information from the performance review to eliminate weaknesses and to optimize your strengths. Performance management helps you to build a more robust business model. Growth without a strong business model can lead to problems because the business cannot cope or finance extra staff or customers. For example, if your customer growth rate is 10%, but you have a customer attrition rate of 20%. To achieve growth you should first to find why you are losing so many customers and solve this problem. Only then should you proceed and try and grow customer acquisitions. Page 5
  6. 6. Achieving Sustainable Growth Analysing Your Business When choosing the correct growth strategy it is important to understand the forces that affect your business. There are three key tools to help you achieve this; these are SWOT Analysis One of the key tools of understanding your business is the ability to set targets, review performance and explain variances against your plan. When the variance analysis has been completed the most effective way to convey its findings to senior management, investors or external businesses is by using Strengths, Weaknesses, Opportunities & Threat Analysis (SWOT). SWOT Analysis is very popular in business plans. However, it is a mistake to stop using it once the business has been launched. It really shouldn't be limited to just start-ups, established businesses should use SWOT analysis to ensure they are aware of factors that affect the business internally and externally. SWOT Analysis is also good because it is a fairly easy tool to use and can be understood by all members within an organization. Page 6
  7. 7. Achieving Sustainable Growth Analysing Your Business Let's go deeper into SWOT Analysis S - Strengths After analysing actual performance against budget/forecast you should state which products, services or departments are doing well and why they are doing well. W - Weaknesses Similarly to strengths you need to highlight the weaknesses in your business and the reason why they are holding the business back. O - Opportunities Both internal and external factors should be listed in your opportunities section. You should be able to quantify the potential upside of maximizing your strengths. This section should include any market changes that may positively affect your business. It is not enough for just state the opportunities. You should go deeper and try to figure out how your business will capitalize upon them. T - Threats Internal and external factors should be listed in your opportunities section. You should be able to quantify the risk in the business associated your weaknesses. Similarly to opportunities, you should include any market changes that negatively affect the business and start to figure out how to avoid them or reduce the risk. Page 7
  8. 8. Achieving Sustainable Growth Analysing Your Business Pestle Analysis PESTLE analysis is a tool to analyze the socio-economic factors that affect your business. Political - Governmental policy and laws, also look for changes in political ideology. Economic - Overall Economic environment, key indicators are the financial markets, currency markets, interest rates, unemployment rate and the inflation. Social - Track any population or demographic changes in the region that your business trades. Technological - Identify any advances in technology that may affect your business. A great example of this is the growth of Cloud Computing over the past few years. Legal - Specific laws that may affect your business, for instance a change in employment law. Environmental - analyze this from the legal and social perspective to understand what is expected from your business. Page 8
  9. 9. Achieving Sustainable Growth Analysing Your Business Porters Five Forces Porters 5 forces looks at the potential threats to your business. This is a great tool to understand the factors that affect your business most. According to Porter there are five forces that affect a business in any market or industry. Potential Entrants - How easy is it for a company to enter your business's market or industry. The more difficult it is for competition to enter your market puts your business in a stronger position. Potential Substitutes - Assess how easy is it for your product/service to be replaced. Power of Suppliers - Does one supplier have a monopoly on supplying the product that your business sells? If so the supplier has bargaining power over your business. Power of Buyers - Think about how essential your product is to your customers, is it easy for them to choose another supplier. The easier it is for your customers to choose another supplier, the more power they have over your business. Level of Competition - How many businesses are you competing with? The more competitors your business has the more in danger it is in. Page 9
  10. 10. Achieving Sustainable Growth Choosing The Correct Growth Strategy Choosing the correct growth strategy is crucial to your actual plan. There are many available to business, the important thing is to choose one that fits your business and is sustainable. For instance if you have cash flow problems and want to grow sales by reaching new markets. A far more sensible and cost effective plan would be to invest in an online sales platform rather than opening a new office or location. If you choose the wrong strategy you could be setting up your business to fail. Page 10
  11. 11. Achieving Sustainable Growth Growth Strategies 1. Open up in a new location 4. Form an Alliance If your business is doing well, you should think about opening in another location with the same demographics as your current store or office. Forming a strategic alliance with a similar or larger company will allow your business to reach a broader market. 5. Diversify 2. Franchising If your business model is working and you have a well established brand, franchising your business is a low risk quick and inexpensive way of growing your business. Franchising is also a good way of raising capital without approaching private investors or banks. 3. License your Product When a larger company licenses your product, they take over the manufacturing and distribution of your product. The company that licenses your product is called the licensee, and they pay you royalties on any sales of your product. Diversification can be done in two ways, you can market your existing products to a new market or sector. 6. Route to Market You can grow your business by increasing your sales channels. Think about increasing your partner network, try and find new stores to buy your product. Another great way of growing your business is by increasing your online presence, try selling your goods on eBay or Amazon before opening up a stand alone online shop. Page 11
  12. 12. Achieving Sustainable Growth Growth Strategies 7. Merge with another or buy 9.Increased Marketing If you want to grow your business quickly and you have enough capital buying or merging another business may be an option. You can increase market penetration by running additional marketing. Ensure your marketing is measurable. 8. International Expansion 10. Delegate Many small business owners discount this as an option, but there is no reason why small businesses cannot become global businesses. By delegating less day-to-day tasks to staff this should give the managers/owners more time to plan and implement growth. 11.Develop New Products 8.Promotion or Price Change To increase market share you reduce your prices. However this should be done with great caution to ensure you keep profitable. Release a market leading product to grab a bigger share of the market. 12. Turn Your Customers into Salespeople This is an increasingly popular growth strategy. Leverage the power of referrals by offering your existing customers an incentive to recommend your products to their social groups. Page 12
  13. 13. Achieving Sustainable Growth Implementing a Growth Strategy Once you have decided the correct growth strategy in place you have to make sure you can implement the plan. The next stage is really to ensure that you have all of the prerequisites to achieve the growth, otherwise you plan will never be realised. Before you start your implementation you should ask. Do you have the cash to buy extra stock or invest in a new website? Are your sales force trained to sell new products or services? Do you have enough staff to handle increased customer demands? To implement your growth plans you need be comfortable you are not overstretching yourself and not jeopardizing existing customer in the search for new ones. Implementation Checklist ● ● ● ● ● ● Growth plan has been approved and is funded Key performance indicators for growth plan have been defined. Staff understand the plan and their role. Your business systems and staff can handle increased demand. You have allocated time to monitor plan against actual results. Additional staff training has been planned. Page 13
  14. 14. Achieving Sustainable Growth Managing Growth To manage your growth plan effectively you need to: 1. 2. 3. 4. 5. 6. Track actual results and metrics against your plan regularly. Update your plan if there has been any significant changes. To ensure staff will deliver success ensure they are motivated, reward them if meet targets. Make sure that your plan is communicated across all of the business and everyone knows what their tasks are. Do not focus solely on the growth plan, make sure the business is still performing in all other areas. Make sure your cash flow can sustain your growth plan. Page 14
  15. 15. Achieving Sustainable Growth Conclusion Growing a business is not easy, it requires funding, detailed planning and monitoring to ensure you do not over stretch your resources. Once you build a sustainable growth model, it can reap your business tremendous rewards for your business. The work does not stop with just managing growth. As your business grows it becomes more complex and requires more management support with strategic planning, business systems and performance management. Page 15
  16. 16. Achieving Sustainable Growth About Us We focus on helping small businesses achieve better results through business planning, performance management, operational efficiency and financial management. Our clients typically grow their business by 20%-50% over the year while cutting costs by 30% We provide our clients with four key services that allows them to access to our expertise on their own terms and schedule. These are: ● ● ● ● Business Mentoring Business Consulting Micro-Consulting Outsourced Business Analysis and Financial Management. Contact Us 3rd Floor, 207 Regent Street London W1B 3HH Email: contact@arinobe.com Tel: +44207 286 7829 / +44 7825 002 908 Page 16

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