You can facilitate and speed up expansion by having a clear road map.
When you run a business, it's easy to get caught in the moment, always focusing on the day in front of you. But to be truly successful, you need to be looking ahead. You need to plan for your growth. To help with that process, many business owners write business growth plans, which provide a timeline for the next one to two years on how revenue can increase. In order to write an effective business growth plan, you need to understand what one is, the different types of strategies to consider, and how to project ways for your revenue to grow.
What is a business growth plan?
A business growth plan is an outline for where a company sees itself in the next one to two years. The growth plan should be formatted to follow along with each quarter. At the end of each quarter, the company can review what goals it met and what goals it missed during that period. At this point, management can revise the business growth plan to reflect current market standing.
Why are business growth plans important?
These are some of the many reasons why business growth plans are important:
Market share and penetration. If your market share remains constant in a world where costs consistently increase, you'll inevitably start recording losses instead of profits. Business growth plans help you avoid this scenario.
Recouping early losses. Most companies lose far more than they earn in their early years. To recoup these losses, you'll need to grow your company to a point where it can make enough revenue to pay off your debts.
- Future risk minimization. Growth plans matter for established businesses too. These companies can always stand to make their sales more efficient and thereby become more liquid. This liquidity can come in handy should you need money to cover unexpected problems.
A business growth plan is beneficial to a company as a whole, but for most businesses, the main purpose is to write it with investors in mind. Investors want an outline of how your company plans to build sales in the coming months.
- Concrete revenue plans. Growth plans are customizable to each business and don't need to follow a set template. However, all business growth plans must focus heavily on revenue. The plan should answer a simple question: How does your company plan to make money each quarter?
What factors impact business growth?
Countless factors can affect your business growth. These are some of the key elements:
Leadership. To achieve your goals, you need to know the ins and out of your business processes and how external forces impact them. Without this knowledge, you can't direct and train your team to drive your revenue. Ultimately, this will lead to stagnation rather than growth.
Management. As a small business owner, you're innately involved in management – obtaining funding, resources, and physical and digital infrastructure. Any management styles that hamper your acquisition of these resources for the sake of saving money could hamstring your growth. The money you'll earn after growing could retroactively cover your current costs.
- Customer loyalty. Acquiring new customers can be five times as expensive as retaining current ones, and a 5% boost in customer retention can increase profits by 25% to 95%. Combined, these statistics make customer loyalty fundamental to business growth.
What are the four major growth strategies?
There are countless growth strategies for businesses, but only four major types. With these growth strategies, you can determine how to build on your brand.
Market strategy: A market strategy refers to how you plan to penetrate your target clientele. This type of strategy isn't intended for entering a new market or creating new products and services to boost your market share; it's about leveraging your current offerings. For instance, can you adjust your pricing? Should you launch a new marketing campaign?
Development: This strategy means looking into ways to break your products and services into a new market. If you can't find the growth you want in the current market, a goal could be to expand to a new market.
Product strategy: Also known as "product development," this strategy focuses on what new products and services you can target to your current market. How can you grow your business without entering new markets? What are your customers asking for?
- Diversification: Diversification means expanding both your products and target markets. This strategy is usually best for smaller companies that have the means to be versatile with the products or services they offer and what new markets they attempt to penetrate.
What to include in a business growth plan
A business growth plan focuses specifically on expansion and how you're going to achieve it. Creating a useful plan takes time, but the effort can pay off substantially by keeping your growth efforts on track. You should include these elements in your growth plan:
- A description of expansion opportunities
- Financial goals broken down by quarter and year
- A marketing plan of how you will achieve growth
- A financial plan to determine what capital is accessible during growth
- A breakdown of your company's staffing needs and responsibilities
How to write a business growth plan
To successfully write a business growth plan, you have to do some forward thinking and research. Here are some key steps to follow when writing your business growth plan.
1. Think ahead.
The future is always unpredictable, but if you study your target market, your competition and the past growth of your company, you can plan for future expansion. The Small Business Administration (SBA) features a comprehensive guide to writing a business plan for growth.
2. Study other growth plans.
Before you start writing, review models from some successful companies.
3. Discover opportunities for growth.
With some homework, you can determine if your expansion opportunities lie in creating new products, adding more services, targeting a new market, opening new locations or going global, to name a few examples. Once you've identified your best options for growth, include them in your plan.
4. Evaluate your team.
Your plan should include an assessment of your employees and a look at staffing requirements to meet your growth objectives. By assessing your own skills and those of your employees, you can determine how much growth can be accomplished with your present team. You'll also know when to start hiring additional people and what skill sets to look for in those new hires.
5. Find the capital.
Include detailed information on how you will fund expansion. Business.gov offers a guide on how to prepare your request for funding, as well as how to connect with SBA lenders.
6. Get the word out.
Growing your business requires a targeted marketing effort. Be sure to outline how you will effectively market your business to encourage growth and how your marketing efforts will evolve as you grow.
7. Ask for help.
Advice from other business owners who have had successful growth can be the ultimate tool in writing your growth plan.
8. Start writing.
Business plan software has streamlined the growth plan process. Most software programs are geared toward business plans, but you can modify them to create a plan that focuses on growth.