4 factors in each category that impact a small business’ growth:
- Owner Goals
- Operational Skills
- Managerial Abilities
- Strategic Thinking
Management Growth Factors:
- Financial Assets
- Personnel Resources
- Business Assets
The first step is getting from the Foundation stage to the Survival stage. Here are the requirements on which you must focus under each of the previous categories if you wish to successfully achieve the “survival” stage of growth in your business:
- Profitability: it is critical that the owner set a profit goal for the company to plan from and strive to achieve.
- Owner still controls ops or sales and may have 1 key manager in the other function.
- The owner must begin to delegate, however strong direction and control still exist with the owner.
- Trial and error as a management style still continues.
- Owners financial abilities must evolve and begin concentrating on cash flow forecasting.
Management Growth Factors
- “Big Dogs” may emerge—loyal high-producers who build the business exponentially in this time of rapid first-stage growth
- Simple organization structure typically exists
- Systems are minimal with evolution & implementation in early stages.
- System focus at this stage indicates high probability for success in future stages of growth.
- Begin to establish a market
- Assets may begin to increase if owner is “asset-aware”
- Right business model could make business salable
- Formal planning is cash forecasting
- Cash begins taking the pressure off from the existence stage
- Credit is still difficult to come by alternative lending sources are required.
- owner, friends, family
- government grants
To create company systems that will consistently and predicatively produce profitability.If that seems like a big task, it is. But, the objectives are very clearly defined. Just follow the directions provide in the Small Business Growth Matrix! If you’d like a further explanation of where to focus in the survival stage read the post 8 Things You Can Do to Achieve the “Survival” Stage of Small Business Growth. Notice most of the objectives center on getting yourself untangled from the day-to-day business. What I often find isn’t that the systems don’t exist. They’re just not formalized and the owner doesn’t feel comfortable letting go and delegating. Notice the problem here isn’t a business/company factor. The business stuff is easy. Write the process down. Teach someone else to do it. And, turn it over to them from this point forward and monitor it through some form of regular reporting. Easy enough, right? Sure, until you add the emotional attachment many owners have to their business. Often the business is a source of their self-identity! Now making the necessary company changes is not so easy! It has taken decades to master the skill of being able to assist a business owner through this transition. I can tell you having assisted in dozens of cases it can take years to get them to this point. Some owners never make it. Usually this is because they can never get past the business as being their identity. They never seem to define a strong enough personal goal to motivate them to make the personal change. Do you have the have the personal goal that will allow you to get to the other side, or you’ll struggle until it becomes a crisis? Our personal and business goal assessment is a tool I have specifically designed to assist with this process. If you don’t have a powerful enough motivation yet I would highly recommend that you check out this tool. So, if you have the motivation to change personally, and you have the roadmap of what objectives you need to achieve to get there, what else do you need to get started? For those that have made it to the other side of survival, what help you get across the chasm?
Consistently achieve owner established profit requirements.With this in mind what should your sales objectives be and what can you do to begin creating sustainability within your sales operation? Notice the emphasis on sustainability here. The small businesses that get stuck in no man’s land get stuck there because they haven’t established growth through the survival stage with an eye toward sustainability. Here are some objectives that will help you move through the survival stage without getting stuck!
Document Everything You DoYou should do this to account for everything that works and everything that does not. This will be important as you begin growing. You will add more sales reps at some point, which means you need to train them. I often find that there is never time when you get to that point. The owner has so many things going on that they can’t get it committed to paper so that it can be shared with others. So, every sales rep ends up going through the same learning over and over. This is not a scalable sales model and slows growth. Document what you do. Then someone can go through your notes. Organize the good stuff. List the things to avoid. Both will accelerate learning with the sales team and your sales growth when the time comes.
Validate your market researchYou didn’t just run out and start selling. You did your research of the market. You looked at what the market wanted and what the competition was doing to come up with your product or service. Sales is where the rubber meets the road. As you begin selling you’ll get real-world feedback to your research and decisions. This is another reason to document. See what assumptions that you made that were right and which ones need to be adjusted. The end result is a better marketing plan and product which will manifest itself in more sales!
Determine Your Conversion RateWe’ve all heard the adage “sales is a numbers game.” This is very true, so you want to pay close attention to how many leads it takes to get a proposal and how many proposals it takes to close a sale. Before you start all of this is just a guess. Now it’s time to determine exactly what the “numbers” are for your business. I wrote a more in-depth post on this titled Is Your Revenue Underperforming if you’d like to get more familiar with the “how to” of sales funnel. You can learn how to set up your sales management to run by the numbers using our training program Selling by the Numbers – Creating Predictability in Your Sales & Marketing.
Learn the objections and develop ways to overcome objectionsTo become an entrepreneur you need to develop a thick skin as people will tell you NO all the time. You will get better with handling these no’s as you begin listening the objections people give you. Over time you know that you’ll begin to hear the same objections over and over again. You will also develop ways to defend your position on many of these objections. I go back to the first action. Document the objections and how you defend your position on each. Again, this helps you transfer your knowledge to others as you bring on more sales reps as your business begins to grow.
Use customers input to improve your pitchWhen you first start selling, you make assumptions on why you think customers will buy. After you begin making sales you have a better source – your customers! So, ask them!!! Most businesses are amazed by what they hear when they ask the question “why do you buy our product or service?” Get enough of the same answers and patterns emerge. If you use this information in your marketing message you’ll begin to find more customers like the best ones that you really want.
Creating Sustainable SalesThe whole point to all of these objectives is USE THE INTANGIBLE RESOURCES you have to improve your business! As you move your business up the growth cycle you will learn more about every aspect of yourself and your business. The better you become at sharing this knowledge the more it becomes part of your corporate knowledge and ultimately culture. Most businesses that don’t find ways to share corporate knowledge find themselves reinventing the wheel over and over again. This stifles growth. You, as the owner, get dragged into things you don’t need to be involved in because nobody else has the knowledge necessary to make decisions or get the work done. Before you know it you’ve reached your limit and your business stagnates because of you! The ideas offered here apply to every part of your business, not just sales. But, sales is where growth starts so sustainability needs to be a part of its focus. For more on this topic I recommend downloading a copy of our eBook How to Get Out From Under Your Business - Creating Sustainable Business Success. If sustainability is critical to success, what have you begun doing begin creating sustainability in your sales function?
- Calculate and monitor your marketing efficiency and effectiveness
- Scale your current marketing plan based your marketing key performance indicators (KPI)
- Add marketing campaigns to your marketing mix to meet any shortfalls
Calculating Your Marketing Efficiency and EffectivenessThese to KPI’s are not foreign to you if you are Tuning Your Revenue Engine. They are 2 of the critical marketing calculations. If you are unsure how to do these calculations check out our training program Calculating Your Revenue Engine’s Horsepower. Marketing efficiency tells you how well your marketing resources are working for you. You want this number to be low. The lower the better as it tells you it is costing you very little to generate leads for your product or service. Marketing effectiveness on the other hand tells you how well your message is targeted. That is, are you saying the right things to the right people to generate leads. If you find your marketing effectiveness is too low then our Developing Your Brand Position will help you hone your target market and message to that market. Managing these two indicators correctly can help you improve profitability. They also provide you with the information you need for the next step in the process.
Scale Your Current Marketing PlanOften small business owners skip this step. As a result they lose out on a lot of extra leads, and end up spending way more than is necessary on their marketing. Based on your KPI’s you should be able to determine how much you need to turn up the spigot to hit your lead goal. Look at the reality of this and your budget to determine if this is realistic or not. I am not advocating only doing what you have been doing, but maximize your return on investment (ROI) here before you begin testing new ideas. If the goal is to be profitable you want to minimize expenses. So, do what you can using what you know works, then move on to trying the new stuff!
Add to Your Marketing MixSales is the name of the game when it comes to business growth. You can’t sell if you’re not generating leads. At some point you will exhaust what your current marketing efforts can generate. As you will add additional campaigns make sure that they are part of an integrated marketing plan that brings in the additional leads you need. But, wait to begin this process until you’ve completed the first two steps. As you add new campaigns you will test and monitor as necessary. More often than not your marketing efficiency and effectiveness will be worse than your other efforts. This is why I recommend waiting to move into this realm, and do so slowly and cautiously. I frequently find small business owners move into new marketing efforts and slide back into the foundation stage as a result. They can’t figure out why. But, when we check their marketing KPI’s it is clear that they are generating leads less efficiently as they were. This means it’s costing more to get the business. More expense means less profit. So, move carefully into this aspect of the self-sustainability stage and make sure you can measure it as you do. For those of you that find yourselves at this growth stage join us to learn how to begin applying Tuning Your Revenue Engine to your business. Just click the button below to register for our next scheduled Masterclass.
- Know what to expect based on past performance
- Can rapidly train new resources to add needed capacity
- Begin refining the system to do things faster and more cost effectively.