Bootcamp #2: Are you Growing?

Is your business actually growing?

You’ve been in business for a while now, you got past those early challenges, stabilized after the post-launch lull and things are really getting busy.  You’ve added new products, are selling through additional channels, you’re onboarding staff.  

You know you’ve reached a new phase: the business is more mature; you’re a whole lot more comfortable in your role, far less easily flustered by the inevitable unexpected developments.  Growth feels good.  You’re ready for more.

But are you really growing?  Businesses naturally get busier and more complex as they progress from startup to established business.  That’s not necessarily growth.

If your revenues grew, but your stress did too, have you really progressed?

What is growth? Is your business growing?

We’re not knocking progress.  Any business that’s made it this far, that’s moved from business plan to real sales has accomplished something meaningful.  Good for you.

But if you like that feeling and want more, want your business to grow, you’ve got to be able to recognize – and measure – growth.

Real growth is:

• Strategic (for the most part).  Sure, you’ll get the occasional out-of the blue sale or customer.  But if you’re really growing, you’ll have a plan for what you’re selling & who you’re selling it to
• Scaleable: an increase in sales shouldn’t mean a mad scramble.  You’ll notice the increase.  You may need to add staff or resources, but you have a plan to handle it.
• Supported: growth becomes scalable when have the tools and processes to support it.  Of course, you won’t have everything at first, but one aspect of preparing for and supporting growth is identifying where and when you need to add supporting structure
• Replicable: from identifying leads to closing the sale through customer support, your team should know how it’s done
• Something you can subdivide and delegate: to scale, you need to be able to delegate.  But you’re probably not going to want to find a “mini me” to hand off your full range of tasks.  Instead, you’ll want to identify areas where you can bring in help — and these are likely to further multiply as you grow

How many parts of your business only work because you make them work?

Just doing more doesn’t mean you’re making progress

Most young businesses are a beehive of activity; everything and everyone is constantly in motion.  But motion is not the same thing as momentum.  And momentum is what you want.

Growth isn’t just about more; that’s just motion.  Momentum is about the quality of that “more”.   Is transaction growth increasingly driven by the team and processes you’ve put in place? Are you getting the kind of customers you really desire, those that will stick around and grow with you over time?  Is the increased revenue you’re experiencing producing greater margins and enhanced profitability?

You won’t get all these things at once, particularly while your business is still young.  Even later, there will always be quirks and one-offs.  But you want to be moving in the right direction.

If you slowed or redirected your efforts, would revenue stop increasing?  That’s not growth.

What’s the “quality” of your growth?

Come on!  Growth is growth.  Right??

Not really.  Which seems better: adding customers who pay recurring revenues and have capacity to grow and pay more, or killing yourself to close a lot of one-off sales?  Selling a lot of low-priced items or fewer, higher-margin ones?  Adding service contracts that require significant support costs, or those with lower?

Not every company has all these options; we understand that.  Many product companies don’t have the luxury of recurring revenues, though repeat customers are a boon to any business.  But as much as you can, for your business, think about:

• Margins: are they expanding?  What’s driving this?  Is it sustainable?
• Revenue mix: what’s the percentage of recurring, contractual or otherwise predictable revenue?  If this isn’t possible in your business, how much is coming from a dependable base of repeat customers?
• Discounts: are you discounting to close sales?  Why?  (Incentivizing volume purchase could be a good reason; if you’re worried you can’t close otherwise, it’s not.)

Is customer quality improving?

Another confusing question; any customer’s a good customer, amIright?

Without a doubt, we love our customers.  But some do the business more long term good than others:

• Retention: landing a new customer is exciting and crucial to your business, but it’s also uncertain, expensive and time consuming.  That’s why you need a base of returning customers to provide earnings stability as you grow.
• Mix: repeat customers are great, dependable, profitable customers.  But no one lasts forever, so you’ve got to have a complementary flow of new customers.  What does your mix look like?
• Value: do you know the lifetime value (“LTV”) of your customers?  That’s the value of the earnings stream you can expect over the customer’s time with you, divided by the cost to acquire that customer.  So, if you’re gaining higher-revenue customers, but they’re not lasting as long or it’s costing you more to land, the value may actually be decreasing.

Do you have room to grow?

Driving high quality growth is only possible if you’re going to be able to support it.  So ask yourself:

• Drivers: How much could the company grow without your personal efforts?
• Constraints: What’s your “growth ceiling”?  What’s the main cause?  How close are you?
• Capacity: if your sales doubled, could you handle it?  Why not?

Want more information on growing your business?

Access our full list of questions here – Bootcamp #2: are you growing or just busy

Bootcamp #1: Managing your time – post and questions