Building Your Strategic Business Growth Roadmap
There are a few key process steps to creating a strategic plan for business growth. The first is documenting where you stand today, which requires understanding your business, the general industry landscape, and where you fit within this landscape.
Insights gained from the first process step will feed the second: crafting a roadmap to achieve your goals based on your desired timeline.
Perform an Internal Assessment
Taking an honest look in the mirror can be challenging. It is easy to miss the things you take for granted about your business. However, you cannot expect growth to solve your internal problems—it will most likely only compound them—so it is wise to do an internal assessment on an annual basis.
An internal assessment may take the form of a SWOT analysis (identifying strengths, weaknesses, opportunities, and threats). Good areas to focus your attention on are your people, processes, technology, and performance. The deeper you dive into each of these areas, the better prepared you will be to create a solid growth plan unique to your company. Here are some questions to help you get started with an internal assessment:
- What are you doing well?
- What are you not doing well?
- Where can you improve?
- How do we compare to our competitors?
One potential inhibitor to growth to be especially wary of is company culture issues. These can be hard to document but are very real and can be disruptive. Bringing in a strategic business advisor to help with your assessment, tell you hard truths, and offer experienced counsel may be a wise investment before you take the next step.
Know the Landscape
Businesses grow by seizing opportunities. Opportunities become visible through thorough analysis of data, thinking outside the box, and understanding the bigger picture through different lenses beyond your own. As a business leader, you always need to be paying attention to market trends (and understanding the impact to you), but this is even more important when you are entering a strategic planning phase. In this step, the questions to start with are:
- What are the current macroeconomic trends? (Especially today this means looking at the costs of goods and services and supply chains.)
- What is the condition of your industry?
- What are your customers facing? Have their expectations changed?
- What is the competition doing?
- Where does your company fit into the market and the views customers have?
Outside forces that will influence your plans are things like prices for raw materials and labor, interest rates, and issues around supply chains. Geopolitics may have to be part of the conversations you have as you do this. Again, strategic business advisors who specialize in knowing about macro trends and growth tactics can be extremely helpful in this step.
Ready to Plan or Pause?
Ask yourself: Where do you see your company and yourself in the next 1, 3, or 5 years? Regardless of your timeline, you want to go into planning armed with deep knowledge about your company and the competitive landscape.
If that groundwork raises any red flags (like your technology is outdated, your culture is siloed, or your processes are weak), it is prudent to pause and figure out how you can transform your company before setting off on a growth path. For instance, you wouldn’t necessarily want to acquire a company when you are already experiencing downward performance trends; the odds are greater that you will end up simply decreasing the value of the new asset as well.
I tell my clients: “Think of a truck trying to drive in sand. Spinning your wheels will only make it worse. The best option is to stop, let some air out of your tires, and gain some traction so you can move forward.”
Build or Buy?
Each business and industry is different, but there are some generalities to guide whether the path to growth is best achieved by building up your company (organic growth) or making an acquisition.
To assess if the organic growth path is best, ask yourself how competitive your industry is. Are you already differentiated in the market? Do you have the time, as well as the resources and dedication, that the growth will take? You may need to hire additional salespeople, take a de novo approach and open additional locations, invest in new equipment, or add marketing support.
On the other hand, if your industry is highly competitive, in a period of dramatic change, or there are economies of scale that can be achieved quickly, an acquisition may be the best path. Keep in mind that when buying a business, you will be paying a multiple of its value on the assumption of future profits. This generally requires more capital than an organic growth strategy, but it ‘buys’ an accelerated growth path.
With the current labor shortage, some companies are acquiring other companies simply for the people that come with it. Another consideration is the importance of brand. If a consumer base is brand agnostic, purchasing a competitor may make the most sense.
Resource: Guide to Buying a Business
A final note: it is never too early in strategic planning to start exit planning. If your plan is to sell at some point, the framework you should be using to guide your growth strategy is how you can create the most value for a potential buyer. An M&A advisor can help assess ways to do this over your anticipated timeline.
Resource: Guide to Selling a Business
If your goal is to pass ownership off to a family member or partners, you need to think about how you will set up the business for the next generation so the transition is as smooth as possible. This could require lengthy initiatives, and giving yourself one to three years for the transition is prudent.
Kory Boyer, MBA
Kory Boyer is a director in the M&A advisory practice area. He partners with companies in numerous industries to assist in areas including inorganic and organic growth strategies, along with the full spectrum of mergers and acquisitions from target identification, due diligence, transaction management, and integration. Kory also helps clients evaluate operations and processes, to help drive improvements through performance improvement and optimization strategies. He completed his undergraduate studies in Mechanical Engineering at the United States Military Academy and earned his M.B.A. in Finance at Gies College of Business at the University of Illinois at Urbana-Champaign. Kory joined Redpath and Company in 2021.
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