Generating growth is often considered the highest priority for a business. Sustaining strong levels of growth requires robust planning coupled with extremely strong internal practices and procedures.
Putting these processes in place and rigidly sticking to them can result in exponential growth, as it did in my previous workplace, a travel company based in the UK. We grew from $50 million in sales to $2 billion in sales in 20 months by devising and adhering to a long-term plan. From this experience, I identified some key areas that must be considered to achieve this level of growth.
1. Be clear on your core assets
It’s essential to be very clear on what the business’s core assets are, or could be. For example, at the travel company we identified that we had real expertise in the long-haul travel market, in particular Australia and New Zealand. We also identified that we had some unique products that others couldn’t provide. These core assets were our starting point and we designed a lot of our plans based around them. What became clear is that it’s crucial that for a company to clearly identify and define what the core assets are, how they can differentiate and determine what it is the company has that is of unique value to its target market.
It is important that a business’ strategy is clearly defined first and that plans follow from that. Growing for growth’s sake and buying businesses for growth’s sake is not a healthy approach. However, those can sometimes be great ideas if they support a clear plan. Business owners should devise a clear strategy and vision for what they want to achieve. Doing this allows for the possibility of acquisitions to support and accelerate the growth plan if they are compatible with the overall plan.
It’s vital to note that a business’s growth plan is not the same as its business strategy. Strategy defines a company’s core assets; those tangible things it owns or controls that are at the foundation of its value. To deliver on this strategy, businesses need a strong planning rhythm based on their core assets, market positioning, and clarity of what the completed state of a business will look like. When my travel company was a $50 million business, we were losing $5 million. We didn’t have much going for us but we had a drive to identify what could be the basis of success, and what would enable us to succeed and grow. Therefore, by determining our core assets, we found the basis of our plan for future growth and could focus on the activities that could take us there.
2. Identify compatible business models that complement the growth plan
To achieve exponential levels of growth, businesses must do more than the standard growth activities. In my travel company, we used two completely separate sets of activities to achieve our high level of growth. The first of which was typical of a company on a mission to grow: we upped our game across all aspects of our marketing and sales departments. We invested more in both online and offline marketing, productisation on products and offers, sales scripts and promotional campaigns. Investing in these areas strengthened our overall marketing and resulted in some organic growth for the business. It’s important not to overlook these activities as they can generate real improvements in service and improve the customer offering.
However, we were also aggressive in driving growth through a second set of activities. This growth was driven by adding different business models to our travel company: we franchised operations, we had licensing operations, we ran both retail and wholesale channels, and we moved into the online realm. These different business models all have different levels of leverage, costs and degrees of scalability, but adding these models, particularly leveraged business models like franchising and licencing, can enable much faster growth that just organic marketing-level activities.
Alongside business model expansion, acquisitions can also be effective when carried out creatively. My travel company acquired three companies during our growth plan but, because the company was in such poor shape when we started, we had little money available. Therefore, we had to become creative about how we acquired businesses that were aligned to our strategy and plan. We utilised various structure, including vendor financing, supplier financing, and conducting a reverse takeover. These different structures mean that businesses can make acquisitions without spending money and, through that, achieve even faster growth.
3. Ensure management and governance practices are robust
As businesses grow to a larger scale, they need to have very strong management and governance practices in place. Smaller businesses can typically get away without some of these practices and just focus on doing enough and working hard enough to achieve growth. Whereas for larger growth, businesses must ensure training, development and governance is extremely strong across the entire management team. During my time at the travel company, I was very lucky to have strong managers leading key operating businesses. These managers were highly knowledgeable and driven and were a real growth enabler for the company.
4. Sustain a high level of discipline
Businesses can adopt all the best practices and methods in the world to achieve growth, but it could all be for nothing if they don’t maintain discipline. It’s very easy to fall into the trap of grabbing at every growth opportunity and not focusing on the areas that create the most value. When my travel company knew we wanted to grow and set a target of selling one in ten of all holidays out of the UK, we were disciplined at shutting down operations and businesses that weren’t working, especially in the first twelve months, and this was key to the speed of our growth.
It’s vital to identify these areas and retain the discipline and courage to be decisive and shut them down quickly. Closing unprofitable areas is essential to a business’s growth prospects because, inevitably, the bad areas of the business cost money and occupy a disproportionate amount of time, effort, focus, and stress.
Andrew Laurie is an entrepreneur, CEO and elite business coach.