How to develop a business growth strategy

Once your business has been founded, it will continue to expand, evolve and grow over time. If you want that expansion to be more than just incremental, you’re going to need a viable business growth strategy behind you.

Hassan Behcet outlines the key elements to include in your strategy, and why knowing your initial business objectives is so vital to the success of your growth plan.

What is a business growth strategy? And why does my company need one?

A business growth strategy does exactly what it says on the tin – it’s your strategy and plan for proactive growth of your business.

As with any strategy, it starts with an objective for what you want the business to look like.

Once you’ve pinned that objective down, carry out some analysis to see how this goal can be achieved. SWOT analysis is the most common way to do this.

By running a SWOT analysis, you can ask:

• What are the key strengths of the business?

• What are the main weaknesses?

• Where are the opportunities for the business?

• Where are the threats that could have a negative impact?

Going through the analysis process helps you to verbalise and formalise what you, the owner, want to do with the business.

When you write it down it becomes real – you turn your theoretical objective into a real-world proposition, not something that just exists in your mind.

What are the main elements to include in your business growth strategy?

A formal strategy will act as the map for the growth journey of your business, so it’s important to include the right foundational elements in your plan.

These will include:

• The objective – the first thing to include in your strategy is the objectives for the company – the key goals you want to achieve.

• The HOW – the next step is to explain HOW you’ll achieve those objectives – outlining the tactical elements that will push you towards growth. 

• The WHY – next ask yourself WHY you do what you do? What will drive the business and how will it help your customers, your community or the world in general? 

• The competition – it’s vital to also look at what your competitors are doing in your intended market. You need market analysis and benchmarking to help you formulate the best approach. If you can generate your own unique selling point (USP) you have a means of standing out and winning more customers.

The importance of good cashflow and a definite purpose

Every growth strategy needs a certain amount of capital behind it. Being on top of your cash position is a vital part of the planning process.

If you start down the road to strategic growth and the money begins to run out, this can be catastrophic. The hospitality sector is prone to more than its fair share of business failures for exactly this reason – poor cash management.

People come into some cash and decide to set up their own restaurant business. They like food so they set up a restaurant that caters to their own likes and dislikes as a diner – i.e., large portion sizes and traditional home cooking etc. What they then find is that they don’t charge the right price for these large plates, and in six months’ time they’ve run out of cash.

Fundamentally, they don’t understand what they’re trying to do. They make portions smaller to cut costs and then people stop booking tables and business dries up. They haven’t thought about the WHY at all, or how it will generate revenue. You need that objective to set you apart.

Things like Salt Bae’s Nusr-Et restaurant may have been aimed at people with more money than sense, but it did have a very clear vision and objective – to make cooking the highest quality steak into a performance and artform, at an excruciatingly high price point.

Pinning down the ‘WHY’ and having a very clear purpose is what set Nusr-Et apart from the hundreds of other steakhouses on the high street.

What are your key indicators when measuring growth performance?

How do you measure whether you’re meeting your growth objectives? The answer is to have very specific key performance indicators (KPIs) included in your management information.

• Cashflow – cash is king. Having sufficient cash in the business is absolutely vital to enable growth and allow you to invest in your business.

• Revenue – are you obtaining stable revenues from your sales, and is this income enough to meet your cash goals and fund the underlying growth that you’ve planned?

• Profit margins – a high-volume business won’t make a big margin, you need to gear the business model around selling a lot of units to make any profit. If it’s a low volume/high margin business, you’ve got to manage that as well, and set the right prices to achieve good cashflow and meaningful profit.

• ROI – ultimately, for any business to be profitable you need to see a return on your investment (ROI). Measuring your ROI ensures that you’re not just meeting your strategic and cashflow targets, but that the whole business is actually profitable.

Where many businesses go wrong is not thinking about the vision and how it ties into the financials. Tracking your KPIs helps you keep both sides under control.

What are the key challenges to growth in the current market?

It’s going to be difficult to grow in 2022, given the current economic and supply chain issues that we’re faced with. In my experience, when times are challenging, people become extremely focused. 

Growth requires money and having access to funding is vital if you want to fund the next stage in your growth strategy.

Support packages like the Recovery Loan Scheme (RLS) and tax reliefs are still there to help businesses get their recovery going. In terms of external lending, there are new risk measures and metrics being brought in by lenders, which could make it more difficult for smaller businesses to get the lending they need.

How can Haines Watts help my business grow?

We bring a sense of objectivity and awareness to the table, to help you expand your outlook.

There’s a lot to think about and deal with as a business owner. We can help you go beyond the emotional elements and look dispassionately at the business model and your finances. It’s about understanding your end game and then, subject to your end game and personal goals, coming up with a strategy that will get you to that goal.

Growth isn’t always an easy journey, especially in the current market. But with the right focus on your core objectives, your finances and your market, you can set the wheels of growth in motion – with your advisers helping you guide the way.

Get in touch for a chat and see how we can help your 2022 growth plan