Grow your business strategically

When you start a business, you often create this beautiful business plan you can’t wait to share.

50+ pages of detailed information about how you’ll start and grow your company. You include your best guess at financial forecasts, customer analysis, industry predictions and marketing strategies. 

It’s a thing of beauty.

Mine was even spiral-bound like a handbook! Ready to pack into my leather satchel bag and strut into the bank. I felt like an absolute pro at the ripe old age of 23… Haha!

(Thinking about it now I must have looked like an absolute idiot to people who actually knew what they were talking about). 

But what’s funnier Jarrod is,

My fancy business plan was useless within a day of launching. 

Because that’s the nature of business. It’s dynamic. 

And especially at the start where things rarely turn out exactly as you’d documented them in your business plan.

No doubt you’ve had a similar experience with a business or investing, or planning just about any big event.

After you start something, it’s different to what you had in mind earlier.

But here’s the scary thing, most businesses never pick up that plan and change it. 

Instead of rethinking or updating it with all the new insights you’re gaining, you put it aside.

You choose to wing-it instead of developing a better strategy.

That’s not a judgement. I did the same thing before I realised my error because it wasn’t obvious at the time.

See, you can grow a company rapidly even without a strategy.

It’s what I call accidental growth. 

You’ve got a good product/service that people seek out and purchase. And each year you get a little busier by accident.

But if I asked you at that point, you’d have a hard time explaining to me where those customers came from.

“They just found you.”

There wasn’t any strategy behind attracting them (apart from making good products).

This type of accidental growth can be great. But not by itself.

You need to combine it with strategic growth if you want to continue to grow into the future.

I learned this the hard way...

In my case, I found myself with dwindling profits and no bloody idea why. 

It was super scary and incredibly frustrating.

Especially because we’d been growing rapidly over the years prior (almost by accident).

It took an event like nearly losing my company to smack me in the face and help me realise that not all growth is equal.

Let me explain what happened…

For a few years, we’d simply been taking on any client who wanted our products.

Seems straightforward right?

Other wholesale bakeries closed their doors or reduced their services, so those people switched to us. And Retailers in new areas heard about us and want to stock our products.

This type of growth was accidental in a way. 

A by-product of the work we were putting into our product and our brand, but not strategic at all because we accepted anyone and everyone.

The reality was, some of those people became our most challenging and demanding clients. Operating in remote locations, with challenging delivery constraints and placing a low value on our products.

It vacuums your energy, sucks your time and bleeds your bottom-line profit.

In that moment, if we just looked at our financial figures, the obvious thing for us to cut was our wages to get things back on track.

And we did for a while too, but we knew there had to be more to it than that.

This curiosity triggered a massive investigation into how we could grow our way to profitability by employing a strategic approach to growth.

In other words, chase profitable growth. Not just any growth.

Here’re a few things we did to understand what areas we should grow (or not):

1. Identified all the different revenue streams and their potential for growth.
2. Investigated direct costs associated with each product and its revenue stream.
3. Looked at the lowest performing products - could we sell more, improve it or replace it?
4. Looked at highest performing products - could we sell more easily through awareness?
5. Investigated what the market was charging and where we wanted to sit - Could we charge more?

The result was that we completely changed our strategy over the last 18 months.

We finally learned what the most profitable parts of the business are and how we could grow them with a good long-term strategy. 

It’s a chunky topic that I look forward to unpacking in later issues but today I wanted to leave you with 3 things I’ve learned about growth that I’m still using today.

1. Not all growth is equal

Balance high-margin (direct) sales with low-margin (wholesale) sales.

Too much of either can be risky in my opinion so we now look to find ways to build volume at the same rate we build profit. 

2. Grow efficiently

Don’t just grow anywhere and everywhere. Target regions and maximise your sales in that area before moving to the next

If you’re spread too thin, your logistics and ability to deliver quality service are going to be challenging. 

3. Sell more things to existing customers

When you start a business, it’s great to limit your offer. 

Keeping it simple is a brilliant way to grow quickly. 

But as you get a loyal client base, instead of finding more customers (which is expensive), balance your strategy to deliver more products to existing customers.

It also helps to spread the risk of competitors taking parts of your business.

That's it!

I hope that shines a spotlight on looking at the best way to grow your business. 

Reach out if you have any questions.

Have a brilliant day.