Growing a Business

For many years, we consulted with “second stage” companies across the country in support of their business development efforts. In virtually every case, we got to hear all about how much their customers love them, how great they think their product/service is, and yet how hard it is to find the time to focus their energy on taking the business to the next level. With a fair amount of experience supporting entrepreneurs and their blooming businesses, we’ve seen some common themes that hold businesses back.

Here are a couple of thoughts that might help prevent you from running your business around in circles, and instead focus your energy on leading the business forward.

Observation #1: Growing a business does not make your life easier.

Once you have a few million in revenue, you will be able to kick back and play golf every day. The business will run itself. Right? Although that is what most entrepreneurs believe, it is inaccurate. Taking care of the customers you have now is hard enough and it is a whole new effort to push the business through a growth phase. The growth phase of a business is even harder than the startup phase. Getting a business launched is really tough, but it is also new and exciting. Managing growth is like trying to launch a startup while still performing your old job; you have the existing business to run plus the new efforts to address. It is just that much more complex.

Think about any change you have ever made in your life, did it instantly make things easier? Or, was there a phase of increased stress and work that eventually led to an improvement. Life and business are the same this way. Prepare yourself accordingly, knowing there’s a long road ahead.

Observation #2: You need to be more than good; you need to solve a problem.

Getting your product or service dialed-in so it is just the way you want it might get a company launched, but it won’t grow the business. Pretty much any company can get about 10% of their target market by putting something out there that is decent. The trick is that growing the business to a 20, 30 or 40% market share means being more than just good. To gain this kind of market share, you need make sure your target customer thinks you are solving a problem.

How many restaurants can you think of that had great food, but didn’t mange to stay in business for more than a year or two? Tons. It is because good food is important, but not the solution. People eat out because they want a to have fun with their friends, to be treated like they are special, to feel cared for, to feel welcomed, to feel hip or sophisticated or energized or whatever that restaurant experience brings to the table. The key is they want something they cannot get at home. They have a problem and a good meal out solves it. If a restaurant delivers solutions with the good food, they are going to grow and endure.

Observation #3: Not all customers are equal.

Business growth comes from increased sales to customers. While some customers are a lot of work, others are a breeze. Some customers want to pay only the minimum, while others are comfortable with bigger ticket orders. The 80/20 rule applies to most customer lists: 80% of sales come from 20% of the customers. But, talk to your staff and make sure that those 20% who generate the majority of your sales are also getting 80% of their effort.

In most business, there is a small group of problem customers. They are not generating a lot of sales, but they are creating the majority of the work. And that costs money. Be sure all your resources are appropriately focused on the clients who serve your brand and your bottom line, and then target your growth efforts to get more of the good customers.

When growing a business, you don’t just want more customers, your want more of the good customers. Weeding out the unproductive ones will mean you are less likely to attract more bad customers and also frees you up to pursue more good ones. Know your customers, know the good ones from the bad, and be smart about which ones you want in order to grow your business.

Observation #4: Killing yourself working the business also kills the business.

Running a business is hard. New challenges arise ever day and there is no magic fairy dust that makes them go away; you have to deal with them. We know it feels like a lot to deal with, but too much time with your nose to the grindstone means you will miss the big picture. You may do a great job handling the day-to-day issues, but without taking time to plan, strategize, and lead, the business will be left to wander aimlessly.

At minimum, hold an annual planning retreat. You might think that you can’t afford to take a day away from the everyday issues, but the reality is that this time is some of the most important time you can allocate for your business. Think about where the business is going, how it has changed over the past year, and make a plan for where you want it to go.

As a business leader, you must be disciplined in your dedication to being a leader. This means proving vision, guidance, and direction. If you are too mired in the details of daily operations, no one is steering the ship.