23 Sep GROWING YOUR BUSINESS
Do you have the four things needed to grow your business?
IX7 is a business growth consultancy. Over the years, we’ve had the privilege of working with some amazingly ambitious MDs to grow businesses, often doubling and evening tripling business revenue.
So how do we do it? How do they do it? In this blog, we lift the lid on what it takes to grow your business.
‘Strategy’ is a big word. It means different things to different people. To us, strategy is the art of forming a hypothesis about the future, and then setting and executing a roadmap to take you there effectively and elegantly.
Strategy gets complicated when it comes time to lift it off paper and put it into practice! People, change programmes, market shifts all contribute to the challenge.
As the MD of a company, it’s your job to set the strategic direction, list the strategic priorities that will take you in that direction and galvanize momentum in the form of strategic execution.
Often, one of the biggest challenges is the last part “galvanizing momentum”. People, as a rule don’t like change. A shift in direction, a new target or an alteration in pace can cause worry, confusion, fear and all of this can demotivate a team.
Key to success, then, is clarity and communication.
Avoid, at all costs, lengthy lists of strategic priorities. Just because that’s what you have on your agenda, just not mean that’s how you have to communicate it. And, you can’t do it all. Be selective about what you tackle when: you can’t have three priorities so rank them in order.
Be creative too. Put yourself in your team’s shoes. What do they need to know, see, feel and understand in order to get on that bus with you and head in the same direction? If you’re not sure, ask them…not just how to get there, but ask them where they’d like to go.
Throughout the whole strategic planning process and the subsequent execution it’s imperative that you have a strong and viable feedback loop. Make sure your team feels confident in asking you questions, and better yet, in making suggestions about the best way to execute the strategy. The more engaged your teams, the more likely it is you’ll succeed.
One of the difficult parts of this is learning to step out of the limelight. In today’s businesses, it’s rarely the case that one person – the boss – sets the direction and then commands the troops to deliver. That approach died long ago.
Success in strategic execution in today’s digital age demands a different type of leadership: level 5 leadership – a fantastic concept introduced by business consultant Jim Collins.
Collins wrote about it in a well-respected 2001 Harvard Business Review article, and published his research in his popular book, “From Good to Great.” In his research, he found that leaders in ‘good to great companies’ have humility above everything else. Because of this, they don’t seek success for their own glory; they share credit for success, and they’re the first to accept blame for mistakes.
Sales and Marketing
Sales and marketing often get grouped together. You might have a Sales and Marketing Manager, for example. It’s important to note that they are in the same family, but they’re not the same thing.
Marketing is about positioning your brand in the market, based on customer insights, competitor research and constant feedback. Sales is about generating and converting the required stream of leads for your business. Combined with operational management (more on this below), it’s a means of delivering value for customers. The more value you can provide, the more you can grow.
Both must work together to be successful and one informs the other. For example, if your sales team are struggling to convert leads into sales, there could be a problem with your product, service or positioning and this information needs to be fed back and addressed.
Sales and marketing isn’t just about engaging with and winning new customers. It’s about keeping those customers too and every great sales and marketing strategy should have a retention strategy built in. If you do a good job for your existing client base, they will become advocates of the future.
As MD, you have so much to think about and often, in smaller businesses, you got this far because you were (or are) the sales team. To grow, the business cannot be dependent on you for sales and marketing. It’s important to set up ways of generating income independently of you. This will maximize the revenue you can earn for the business, and will free you up to get back to the strategy.
That said, it is your job to help inform the sales and marketing strategy. By orchestrating the right process of gathering meaningful data, engaging with the market and drawing hypothesizes based on what you see, you can help to steer the business in the right direction.
Marketing and sales intel will help to inform your over arching strategy and vice versa.
The finances are the backbone of your business and this covers a range of core elements including record keeping, balancing the books, profitability, cashflow, investment, growth, payroll, tax management, assets.
In my experience of working in large corporates in London, most CEOs of multi-national organisations ‘did their time’ as Finance Directors before taking the reins as CEO. Understanding the money in your business is critical.
The word ‘Finance’ can send chills down the spines of MDs, however, particularly for those in smaller companies. But, if you want to hit £1M, £10M, £25M it is unavoidable, and in fact, the finances aren’t something to dread. Understanding how money works in business can unlock opportunities for growth.
One thing you can do here is engage the services of a reputable accounting firm, or hire in a Finance Manager. However, an accountancy firm will never care or understand about your business as much as you do so never outsource blindly – it’s a source of gathering information and insight, not a source of delegating your duties.
Another element of finance that people often don’t consider is that of customers and suppliers, or debtors and creditors. Customers bring in money for your business and suppliers are an expense. It’s important then that you have good sources of both.
It is good practice to regularly review your customer and supplier list. If, for example, you have a customer or two that constantly pay late, always complain and take up a lot of time in your business, why not consider parting ways? It is often said that 80% of your revenue will come from 20% of your customers so why not aim to remove the bottom 20% year on year. Sometimes this happens naturally but sometimes you need to face reality and make it happen.
I’ve written at length about operations in another blog – what operational management means to your business – and it’s well worth a read. For me, operational management is about transforming inputs into outputs; it’s about creating value from the resources you have in the most effective way possible.
It is my belief, however, that operations is not a business default. It shouldn’t happen day by day, by accident. Operational management is about designing the business you want to tomorrow; it’s about asking yourself what systems, processes and people do you need in place today, to realise your goals tomorrow.
Further to the four elements outlined above – which is more about knowledge, experience and understanding – there is a series of behaviours all successful business owners or MDs must exhibit too, and they don’t all come naturally!
One for example, is being able to switch between all four elements outlined above, seamlessly and strategically. It’s not your job as MD to get stuck into the details every day…unless there is a major problem of course! It’s your job to empower the right people to act accordingly in each other these areas and this means learning to let go…learning to delegate.
To ease the process, you can put in place weekly catch ups, reporting systems and triggers to ensure things run smoothly but at the end of the day, if you can’t let go, you can’t move on. For example, if you’re the only one in your business who can sell, or who can raise an invoice, or who can set the strategy, how will you ever free yourself up to move on to the next challenge?
A second behaviour needed is the ability to ask the right question. So many times, when I’m coaching MDs through our change progress, it is often one small question that unlocks the key to transformative growth. Learning not to jump into a problem, and first trying to define the right question is critical to growth. For example, in one recent client meeting, we were asking how they could hit £500k. For fun, we asked what they would have to do as a business to hit £1M. It generated a better quality list of ideas and it opened their mind up to bigger, more transformative actions. Plus, it made the actions needed to hit £500k so much smaller and more achievable.
I have no doubt they’ll hit £500k, they’ll probably hit £1M now.
A third behavior is the courage to face the brutal realities. When something is niggling you, something about your strategy, your market position, your cashflow or your operational management it’s important you face it, no matter how concerned you are about what you might find.
Anything can be fixed or put right and the sooner you face it and gather the facts, objectively, the sooner you can tackle it. Remember, successful people never spend more than 20% of their time on the problem and they spend 80% of their time on the solution. In this scenario, flexibility is key. Sometimes, sticking to the plan you laid out at the start of the year is not the answer. All plans have a purpose: they are designed to test a hypothesis. If, on the journey, evidence proves the hypothesis to be wrong, pause, set a new hypothesis based on the new information and pivot accordingly.
A fourth bahaviour is decisiveness. Noone likes a ditherer, especially not at senior levels. Being in business is about making trade-offs. It’s about opting for one direction over the other and being able to articulate the reasons. It’s about turning down opportunities in favour of better scenarios. I always say “Just because you can do something, does not mean you should do something”.
A fifth behavior is the ability to simplify. Your job as MD is to get people on your bus and encourage them to help you steer it in the right direction with you. Big words, lengthy plans, abstract concepts will not help your team to follow you. Cultivate the art of simplicity.
The sixth and final behavior I wanted to mention is the importance of role modeling behavior. Your teams will do as you do, not as you say and the lowest standard you allow in your business is the highest standard you will ever achieve. Don’t ask, before you do; do before you ask. Be the model of behavior you want in your business and don’t make a fuss about it. Model team work and cooperation and reward people who perform in line with the values of the business or have a polite word with the people who don’t.
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