Feature Article
Ways to Define Growth for Your Business
You can grow your business in a variety of ways, but you need to define it both for yourself and for your company. Mark Richardson offers eight ways of looking at growth.
By: Mark Richardson, Contributing Editor
In three to five years, would you like to be where you are now, still doing just what you’re doing now? What about the top players on your team ... how would they answer that question?
For most success-oriented people, yearning to grow is normal. But growth can occur in a variety of ways, so it’s important to define it both for yourself and for your company, and to then make sure your vision is aligned with how others you work with define growth. Here are eight ways of looking at growth, which you may want to contemplate.
1. Top-line sales. This is an easy one to watch year to year. If all areas of the business are working properly, that generally results in a healthy profit, which is essential for creating opportunities for key team members.
2. Client base. For some businesses, this may be a critical measure because it can be leveraged for future value. A growing client base can also improve profitability and predictability.
3. Team. This measure is both quantitative and qualitative. If you believe that people are your greatest asset, then a focus on team growth improves and builds on this important investment. Remember that you are a member of the team, too.
4. Profit. Improving short-term profit is generally not too difficult—you can cut costs, improve efficiencies, or increase margin. The key to profit growth, however, is performance over time. If you want a sustainable business, then you need to invest some of today’s budget and profit in a way that earns future returns.
5. Market share. The remodeling industry has some large companies, but few, if any, can claim more than 1 percent of overall market share. For that reason, a small change—from 1 percent to 2 percent, say—would be huge and would come with real growth pains.
6. Products and services. This has both organic and strategic elements. Organically, as you create new clients, you also discover new products and services that you could be providing to them. Strategically, you also want to reduce risks in economic downtimes. During the last recession, many design/build firms fell off 30 to 50 percent; by contrast, businesses that were focused on specialty services dipped significantly less or even grew a little during that period. Adjusting the blend of products and services you offer is always worth considering, although it can be tricky to accomplish.
7. Geographic. New markets are something to consider only if the stars are aligned and bright; that is, you have clients in a new market begging you to work for them, or you have a key team member who is relocating and you want to give him or her the opportunity to start a branch office. Generally, the physical distance is an important consideration (closer is better), and it’s always best to have a strong plan before executing.
8. Alliances. Though less obvious, potentially the most fruitful growth opportunity is increasing your network of strategic alliances and partners. These can be with key manufacturers interested in win-win growth, or with trade partners or related businesses that want to build a synergistic client base. This growth approach can be the least risky and the most profitable. Imagine increasing your margins, reducing your lead-generation costs, developing more committed relationships, and even having access to a well of business acumen much deeper than you have now.
I’m not saying that bigger is always better. But I am encouraging you to make it a priority to define growth in terms that are consistent with your vision, your values, and your mission..
This article was originally published in Professional Remodeler 2016.
