Businesses use strategic growth plans to guide their increase in market share sustainably. Here’s how you can create and refine your own.
Ambitious business owners are often driven by a growth mindset when it comes to building a successful venture.
In the early stages of a business, the focus tends to be about product development and product-market fit. While getting that process right requires a significant time and financial investment, once the product is functioning well and the optimal market is identified, the next inevitable step would be expansion.
Reaching this phase of growth is an exciting milestone because it demonstrates that the business model has potential. As exciting as it is though, it can be a very difficult process to manage – which is why strategic growth plans are important.
What is a strategic growth plan?
A strategic growth plan is a blueprint that businesses create to map out a feasible pathway for them to increase their market share.
In other words, these plans provide a critical analysis of various business considerations and potential challenges or roadblocks, and put forward a framework through which sustainable business growth and expansion can occur.
For example, if a business is looking to increase its market share through selling its product in a new geographic market, a quality strategic growth plan will guide the expansion process step by step – taking into account any and all product or industry related challenges that the proposed growth may present.
3 common growth challenges
While business growth can present a plethora of challenges, there are three roadblocks in particular that tend to present themselves across all business types and industries.
1. Loss of quality
Whether it’s a service-based or product-based business, growth means more work to deliver on.
When delivery at scale is not managed correctly, it is almost inevitable the quality that was kept when operations were smaller will drop significantly.
Strategies need to be put in place to maintain quality control levels while ramping things up.
2. Compromised company culture
Company growth will almost always mean an increase in employee headcount, or at least a redeployment of existing resources into other areas that enable the growth to occur.
When either of these scenarios occur, it becomes very difficult to foster a workplace culture that prioritises the health and wellbeing of employees, holds strong to its values, and encourages teamwork and comradery – which can lead to detrimental business outcomes across the board.
Processes need to be created to ensure that company culture remains prioritised during a business’s growth phase.
3. Cashflow woes
Expanding a business is almost always an expensive process that requires far more access to cashflow than normal. Without the appropriate planning and consideration, growth strongly impact a company’s ability to fund its ongoing operations – potentially jeopardising the entire business.
Strategic Growth Plans need to be designed to form a growth path that addresses each of these issues, as well as any others that can potentially arise throughout the journey into expansion.
Taking your industry into consideration
Outside of the general issues that can occur as a result of growth, there are also industry-specific considerations that need to be taken into account as businesses seek to increase their market share.
Whether they be regulatory, population, climate, or market-related considerations, no stone can be left unturned when planning for expansion.
Take Google for example. As the company continues to expand its suite of products and services into different jurisdictions, it always needs to consider laws of each location and how they may impact its ability to deliver a particular service.
To deal with this, Google has an in-house group of economists, lawyers and product specialists who are constantly navigating these considerations to ensure sustainable business expansion – a strategy which was likely developed within one of their own strategic growth plans.
Of course, not every organisation will have access to a team of full-time experts like Google, but this should serve as a reminder to engage closely with your financial advisors, accountants and bookkeepers (as well as other relevant stakeholders) when developing your plans.
The top 3 benefits of a quality growth plan
An effective plan to manage business growth can be beneficial in so many ways. For instance:
1. It sets a definitive agenda for your business and its leaders
A quality strategic growth plan will pre-empt the entire expansion journey, and provide key stakeholders with unique insight into what to expect throughout the process, and formulate extensive protocols for each step along the way.
2. Its success is measurable and can be adapted on-the-go
Given that most solid growth plans will be comprised of several key milestones, businesses that use these plans can track their progress as they meet these milestones, equipping them with all the data they need to make informed decisions in other areas of the business.
3. Contingency and risk planning becomes clearer
Critically analysing the potential risks on a granular level also allows businesses to calculate risk probability and develop a series of contingency plans that can be triggered if certain events that were considered during the planning process end of taking place.
4 strategies used in successful growth plans
Some of the world’s largest companies have navigated significant growth phases through the use of carefully formulated growth strategies that have proven to be effective.
These growth strategies can be summarised into four key categories:
1. Marketing strategy
These strategies are typically used by those businesses who are looking to increase their market share by tapping into more people within the demographic in which they have found a solid product-market fit.
Tactics like launching a new marketing campaign, adjusting pricing, incentivising existing users to share the product with their networks all fall under this banner.
LinkedIn has always been a strong adopter of the ‘market strategy’ for its own growth – especially in its early days. It always encouraged people to invite all of their contacts to join the professional network through the use of email campaigns and UX strategies as a way to increase its market share.
2. Development strategy
The strategy for expanding a business through taking the existing product and offering it to a new target market is often referred to as the ‘development’ strategy.
Looking into a new geographic location is a common form of ‘development’, as has been done successfully by many large businesses, including Deliveroo, who created an on-demand food delivery product in England, and expanded their business model to many other locations around the world.
3. Product strategy
This strategy is essentially the inverse of ‘development strategy’, where the company expands through offering a new product to its existing target market.
A great example of this growth strategy being deployed successfully can be seen in Uber’s launch of Uber Eats. After successfully capturing a set of customers for its ridesharing services, Uber promoted a new food-delivery service to those same customers.
4. Diversification
This method of growth is a major pivot from the rest, as it seeks to expand through the development of a new product for a new market.
Diversification relies on a stellar brand reputation that stems far beyond the existing products or target markets.
Amazon successfully adopted this growth strategy, taking on an endless number of totally unrelated services, and leveraging its name to get them off the ground.
Developing a strategic growth plan in 4 steps
When developing your own strategic growth plan, there are four key steps to follow to ensure that the plan can be used for healthy business growth:
1. Clearly define your goals
The biggest mistake a business can make when formulating a growth strategy is set out to grow the business in too many ways.
Identify your goals, and set very limited timeframes to achieve them. Put forward bite-sized milestones and follow your plan diligently.
With a clear set of goals, the right strategies can be leveraged and used to their full potential.
2. Identify key personnel
Each strategic growth plan will require the involvement of different people on your team, and it’s important to know who those people are and include them in the planning process.
If the strategy is product focused, you will need to round up the product development troops, and if the plan is to shift target markets, your people relations and marketing specialists will need to rise to the challenge.
3. Make sure you choose appropriate tactics
A fundamental component of any working strategic growth plan is the tactics that are put forward as ways to achieve the end result.
Make sure to conduct adequate research into the best possible tactic to be used to achieve the intended outcome.
For instance, if you intend on using a marketing strategy for your expansion, consider the type of campaign that will yield the best results.
4. Steps must be actionable and KPIs achievable
KPIs are a key tool in guiding a business through the steps of its growth strategy. Each step within the plan needs to be actionable without unforeseen obstacles, and the KPIs need to be met within a timely manner.
Simple and steady wins the race
Expansion is an important part of running a business, and strategic growth plans are all about creating a framework for sustainable growth. They anticipate challenges, provide a critical analysis of circumstances, and allow for a certain level of comfort in risk taking.
By choosing a well-thought-out pathway of growing your business, not only are you more likely to experience greater levels of business success, but the people you impact along the way will be better off for it as well.
Along with implementing a strategic growth plan, Australian operators can find out how a cloud business management platform can support your growing business here.
Source: MYOB February 2022
Reproduced with the permission of MYOB. This article by Benjamin Kluwgant was originally published at https://www.myob.com/au/blog/strategic-growth-plan/
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