To onlookers, business success may appear to be made from a secret ingredient however in reality, there is no hidden formula. All successful businesses start somewhere, and every founder will have experienced trial and error when looking to expand, increase profits, and market to new audiences.
It is these mistakes that make business owners and their management teams into the experiences and established businesses the are today. Trouble arises when these mistakes are repeated and not learnt from, this inevitably leads to failure.
To maintain momentum and drive success, even in challenging times, businesses must stick to core principles. It is often these principles that are forgotten about, perhaps due to how simplistic they may appear.
People make a business
Firstly, it is all about people. No matter how great your business or idea you will not drive it to its full potential without a strong team behind you. Great people will make a half-decent idea a big success. Half decent people will not make a great idea a success.
The process of recruiting and finding the best talent is never easy. You must over-invest time in the process as it is a fundamental investment and future growth driver. Two principles I have learned over the years when looking at recruitment are, to surround yourself with people who are better than you and do not be afraid to recruit someone who could make you redundant.
If you can achieve these, the benefits are clear. Better business results, stronger talent pool, and with capability future fit plus built-in succession planning.
Simplify your vision and how you get there
Secondly, at the heart of business there should be a clear vision of where you want to get to supported by a clear strategy. Strategy should not be complicated, as it is the set of choices you make to help you deliver your goals. It is your roadmap.
In thirty plus years of corporate life I have reviewed many. Countless textbooks have also been written on the subject, but there are some basic principles that I firmly believe work best. Namely, the vision should be clear, motivating, and understood by all in the organisation. In addition, it’s important to remember ‘less is more’. Too often strategy papers can be voluminous and complex. The best strategy work I have seen is on one piece of paper with clear, simple articulation of the choices you will do and equally what you will not do. It is very empowering to tell a team what you are not going to do.
Don’t fall too far from your core market
In any business, the “core” needs to be healthy and profitable before you divert any significant level of resource to expansion. The core pays the salaries and the business drivers so you must not begin to invest significantly in new products, geographies or services unless the base is strong. This is another seemingly obvious point, but there are thousands of examples where enthusiasm to grow has caused companies to fail.
As you do evaluate expansion, having an array of ideas and opinions needs to be balanced with a clear brand that consumers feel they relate to. Whilst adding new products or services is an organic part of company growth it needs to be tempered, so you do not drift too far from your core market.
Therefore, before ploughing resources into new markets, you do need to ensure that new product and services will be of value to existing (or new) customers. You may need to ask some critical and challenging questions such as, is there a clear need for this? Is it marketable? Does it sit within the brand equity? How much will consumers pay for it?
If you conclude that the demand is there, only then should you move onto executing that new idea because it will require a significant amount of investment of time, resources, and money. If the market entry cost is potentially high, you should also evaluate a test & learn approach by launching in a limited way and, if early traction is good, then expand.
Once you have revised your existing offering to appeal to a wider audience, you need to engage with these new consumers to increase brand recognition. If your business is not online, add this to your to-do-list because in today’s era, convenience is key and it has never been more important to maintain an online presence.
A website is the shop window to your brand and, done well, can allow you to build up a direct one-on-one relationship with your customers. If it was already an important criterion before, the impact of Covid-19 will make it absolutely indispensable as our shopping habits are likely to shift even further to direct, online sales.
With social media and the abundance of mobile technology, it is not difficult nor expensive to drive traffic to your site, so you need to ensure the site is engaging, easy to navigate, informative with a call to action to purchase. Loyal customers who return to your site are worth their weight in gold!
Cash and reserves
Finally, a healthy working capital is essential not just for growth but for the day-to-day operations of running a business. Even as you start to see your business develop, you must keep a scarcity mindset with cash and make sure you have some reserves for when something goes wrong (which will happen). This has caused thousands of start-ups to fail as they hit unexpected turbulence and had no contingency in place.
In today’s global economy, there is a lot of uncertainty so there has never been a more important time to maximise liquidity to meet short term obligations and avoid going bust. Not to mention, flexibility is key when a business is looking to expand and without enough working capital a business can lose this flexibility which in turn can harm the ability to exploit new business opportunities.
To conclude, expansion is the only way to increase profits and reach new markets. Whilst there is no ‘one size fits all approach’ to expand a business, it is always a good start to go back to the basics. This means staying focussed on your core business and strengths by checking any new business matches your existing brand culture. Make sure you also have the right team with an aligned vision underpinned by a crisp, clear strategic roadmap. To achieve a dedicated and hard-working team that is excited about company success it is important to invest back into it.
Written by Alan Sutherland. Have you read?
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