How Rapidly Should You Grow?
Q: I am currently sorting out lots of options for growing my company. How can I determine if, and how quickly, I need to try to execute growth strategies?
A:”When” you should implement strategies designed to grow your own business is an issue of timing and is represented with the specific date where you will start applying the components of any one, or multiple, growth strategies. “How Fast” you try to cultivate your business is called your”rate” of growth and is measured by the rate of expansion which you’re seeking as a result of executing one or more growth approaches. The timing and speed of your company’s growth efforts have a substantial impact on the ultimate success of growth efforts and must be suitably applied in tandem when implementing each strategy.
Real business growth happens when your company is experiencing permanent increases in profit as a direct outcome of quantifiable and sustainable gains in sales volume. Even though your business is enjoying increased sales volume, unless these additional sales dollars contribute to the business’s bottom line, they’re just symptomatic, and may be regarded as a type of temporary “ghost expansion”–providing your company the appearance of growth, without creating the necessary inherent increases in earnings.
Business growth is best achieved by matching the timing and pace of your company’s growth efforts to market requirement. Ideally your company will enter the marketplace with expansion strategies that were designed in reaction to untapped existing need for the products and services and/or to make the most of any fast emerging new requirement.
Several scenarios that may generate increased market demand to your company’s products and solutions are:
Entry into a heretofore-untapped market (such as when your company enters a marketplace for the first time.
The dawn of new goods or services (complementing your existing product combination ).
An increase in size of the marketplace (perhaps in response to some major company opening a new place within your target market).
A competition leaves the market (by eliminating part of their product line or by shutting their doors altogether.
Consumers experience a significant change in their tastes (including the movement from land line phone service to the usage of cellular phones).
You create new need where it doesn’t exist (note: this can be very expensive in terms of money and time, and can have a high degree of danger that it will fail to create the anticipated profitable sales increases).
If you attempt to insert growth strategies ahead of marketplace need, your efforts may be wasted on customers who do not think they need your goods or services; and should you put in the industry late, you might have lost the chance to capture market share, as your competitors may have already done so. By the same token, even if your growth plans attempt to generate increased sales too fast, your marketing efforts and their corresponding costs may be disproportionately large compared with the market’s ability to process and respond by initiating new earnings. What’s more, if your growth strategies underestimate the market’s demand and are introduced too slowly, your organization might not reach all of the prospective customers when they’re ready to purchase, and your business will suffer a lost opportunity to grow faster.
Bear in mind that the process of company growth is continuing. For this reason, you are invited to add both long-term and short-term growth strategies in your plans.