Five key things that fast-growth businesses do well
But it’s perhaps more useful to look at the common characteristics of fast-growth businesses, rather than the rate of growth itself.
Start-ups that manage to scale quickly generally do one of three things, according to Marc Peskett, director at business advisory firm MPR Group: sell more of your current product to existing customers, sell new products or services to existing customers or sell to new customers.
There is no single right answer to this conundrum, but it is vital that you put in place several essential internal processes to aid your growth.
We’ve picked out five things that fast-growth businesses do well. Are you emulating them?
1. Standing out from the crowd
The businesses best set up for speedy growth are those that are in the right place at the right time to exploit a consumer trend or new technology that is set to capture the market’s attention.
“It is not just luck,” says Dr Tom McKaskill, serial entrepreneur, educator and author. “The best ventures are based on a dramatic change, whether it is technology, regulations, the economy or in the way society operates.”
“That change generated an opportunity for a new product or service, a new process or a new way of delivering an existing product or service to meet an unmet need or solve an existing problem in a much more effective manner.”
Peskett adds: “To continue to grow, it’s important that you provide something new for the next generation of improved products and services that the market wants.”
“Your offer needs to evolve over time to stay relevant to the market and fresh to your existing customers. In fact, you can combine the two, by testing a revised offer with some of your existing customers.”
“Take an element of your product or service and refresh the offer associated with it to make it sound new and therefore exciting to your current customers.”
“Gather feedback from them and test variations on the offer to refine it and see which generates the most enquiries or sales and then launch the winning combination.”
“This beats the approach that many businesses take of developing a new offering and trying to make it absolutely perfect before they test it or bring it to the market. Time and effort is wasted here and the outcome could be that the market isn’t interested in buying anyway.”
2. Customer targeting
Most start-ups are happy to get a sale from any source. All income is equal, right? Fast-growth ventures, on the other hand, have a keen understanding of exactly who their customer is and why they need the business’ product or service in their lives.
“While it is possible to sell to everyone, the successful high growth business typically has a very tight definition of the ideal customers and knows how to find them,” explains McKaskill.
“The best customer is easily identified, able to be approached and is willing and able to purchase. Businesses which rely on the potential customer finding them have difficulty proactively influencing their growth.”
Once they identify their target customers, high-growth businesses appeal to them in a clever way. They take choice out of the equation by positioning themselves as the only viable remedy to a problem that must be immediately fixed.
“Business is driven by transaction revenue,” says McKaskill.
“The best high growth businesses solve a problem which has high urgency, high utility or resolves a strong physical or psychological need for the customer.”
“Situations where customers have extensive choice, can delay buying, or are indifferent about buying the product or service are very difficult situations in which to drive a high growth business.”
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3. Making cash work hard
Cash is a vital ingredient to not just the day-to-day operation of your business, but also to its growth.
If you aren’t chasing up invoices or maximising sales opportunities, your start-up will grind to a halt. But to grow, you need to do more than this – you need to reinvest your cash wisely so that it works harder for you than just sitting in your bank account.
“This means making your dollar work for you by investing it where you’ll get the best return, monitoring its movement through your business and supplementing it with additional funds to support the growth of your business,” says Peskett.
“You need to track the actual movement of cash around your business by getting to know your cash-to-cash cycle and making improvements to it to make your cash work more efficiently and free up lazy cash that’s available in your business for use.”
“Cash power is vitally important as, without it, your business will grind to a halt and any growth initiatives will lack investment dollars.”
“If you’re already maximising your dollar, you should investigate external funding sources that can support your growth activities, such as lending, grants, tax concessions and investors that can provide the additional dollars you need.”
4. A long-term growth strategy
In order to grow your business, you need to be thinking a little more long term than paying your next bill or getting your next sale.
“High growth firms typically create future scenarios which they want to achieve and then develop the tactical plans to get them there,” says McKaskill.
“Constraints to growth then become apparent and investment can be made to overcome them. Often acquisitions are used to underpin the growth.”
How can you do this? By making yourself as informed as possible and by putting proper procedures in place.
“High growth, by its nature, requires the business to solve the problem of scalability,” says McKaskill.
“Many businesses are constrained by the shortage of skilled staff or essential ingredients. Only by developing a robust process where the business can be expanded through scalable systems and/or processes, or be readily replicated, can the business grow rapidly over an extended period.”
Peskett adds: “Business owners need access to information that helps them manage the current business and make decisions for the future.”
“This knowledge comes from having the right internal systems and processes that gather information about the business such as new business leads and conversions, sales, profitability of customers and products, delivery time frames, average transaction values, returns and complaints, costs to the business and many other KPIs that might be important to your business.”
“Having this information to hand means business owners can be kept up to date, monitor the activities and performance of the business, spot issues and opportunities and make decisions based on fact.”
5. Flawless execution
Does your business function smoothly from the acquisition of customers to fulfilling the sale? Is there anything preventing customers from returning to you because of a failure in your operations?
“The best laid plans come to naught, if you don’t have the information, resources, mindset and processes to see it through to fruition,” says Peskett.
“For small businesses, this generally means the business owner needs to have capability and capacity to execute their ideas and the leadership skills to ensure their team supports and helps drive growth initiatives.”
“This generally means you need to be in touch with your customers, staff and any experts you rely on for their specialist knowledge and skills to supplement the gaps in your own knowledge and experience.”
“It also means you need to be able to rise above the day-to-day issues and have systems and processes that allow your team to take care of those activities, freeing you to work on the business and drive these initiatives.”