SMEAZ BUSINESS GROWTH STRATEGY

PROGRAM

IS GROWTH ACCIDENTAL/LUCK?

“Having in place a simple, yet on-point business growth strategy for any small business or start-up will represent an important step to remain strong and viable in business. Many businesses stagnate due to a lack of a written, business growth strategy. More than 90% of start-ups fail within their first year, and when questioned as to their business growth strategy, one discovers that it either does not exist or that it is full of generalities.” – Edwin Dearborn (Business writer)

IS GROWTH ACCIDENTAL/LUCK?“While luck always plays a part in any success story, attention to detail and a deliberate strategy will greatly improve the probability of success..”

“Successful high growth ventures take a holistic view of the business. Every facet of the business is important. It is not sufficient just to have a great product or service.”

– Dr Tom McKaskill (author)

WHY A GROWTH STRATEGY?

Provides RoadmapClear Vision of your destinationDirected effort/Purposeful activityBreaks overall goal down into manageable

stages

STAGES OF BUSINESS GROWTH(BUSINESS LIFE CYCLE)

Existence Survival Success Take-off Maturity Decline

Existence

Obtaining customers and delivering service/product (developing a business model)

Unstable product/product quality Owner is heavily involved/ Business is the owner No or few systems and formal plans Business is loss-making Failure occurs due to:

Failure to develop viable business model, orquitting or running out of capital.

Survival

Demonstrable, viable business model. Key problem shifts to relationship between revenues and expenses

(growing the customer base) Business generally operating around its breakeven point Limited number of employees, hierarchy starting to emerge Minimal systems development, basic cash forecasting Business still synonymous with the owner May grow to stage III(Success) or may remain here for some time Most SMEs remain stuck at this level for several years due to:

Failure to grow customer base/ retain customers, and Failure to develop systems (especially people management) Lack of funding

Success

Business is profitable, generating positive cash flows Highly structured, and now has professional managers Advanced planning and management systems Automation Company now has own identity, apart from owner Owner engages in strategic planning to steer company

forward Owner can:

Stagnate Sell the business Exploit company's success as platform for growth to stage 4

Take-off

Business now expanding from original area of operation

Can be multi-stage (local, regional, international)

Owner needs to transition from being Entrepreneur to being Executive

Decentralisation and divisionalisation

Systems expansion to manage multiple locations

Owner needs to delegate responsibility to improve effectiveness.

Generating cash, but will not be enough to meet growth demands.

Avoid ill-planned investments brought about by owner impatience

Often owners bringing business to stage III are unsuccessful at stage IV

Omnipotence, omniscience and omnipresence

Maturity

Business has achieved its vision Consolidation and control of financial gains Extensive and well-developed systems Challenge is retaining flexibility and

entrepreneurial spirit Owner often out of the picture

Decline

Business fails to adapt to changing market circumstances, customer needs/wants

Competitors & innovators take market Lack of innovative decision-making and avoidance of

risks Business dies due to lack of adaptability

Identify Your Stage of Growth

Based on the stages of growth that we have gone through, identify your stage of growth

Complete the online Growth Strategy Formulation Questionnaire (homework) https://app.process.st/checklists/Dummy-1-

j5FcT5dUOlTHAY3dQENPMw

FOUR TYPES OF INVESTMENT

AssetProjectBusinessEntrepreneurial venture

FOUR TYPES OF INVESTMENT

Asset(e.g rental property, shares, annuity)

Low riskLow returnMinimal involvement, little skillUsually requires high investment levelUniform, market-determined price Immediate profitability (1-3 months)

FOUR TYPES OF INVESTMENT

Project(e.g chicken rearing, flea market)

Subsistence-oriented Relatively low investment level Moderate to low risk Moderate return Moderate involvement, basic skills Very competitive, uniform pricing Short time to profitability if done well (3-6 months)

FOUR TYPES OF INVESTMENT Business(e.g consultancy, supermarket, farm, franchise)

Commercial / growth-orientedHigher level of investment than projectModerate to high riskGood return if done wellModerate to High level of competitionRequires active participation, skill/trade/experienceAverage turn-around time to breakeven is 6-18 months

FOUR TYPES OF INVESTMENT Entrepreneurial venture(invention, innovation, new product/service)

High risk Super-normal returns Low or no competition High investment, especially in education/marketing Often requires steep learning curve for both

entrepreneur and customers Very involving and challenging, passion Long turn-around time: 18 months+

Identify Your Type of Business

Which of the four types of investment are you engaged in?

Set Your Vision

1)Product2)Customer3)Geography

Growth Strategy

Your growth strategy is the plan that tells how your business will move from where you are, to when your business achieves its vision

Business PlanThe business plan takes you from

one stage in the business cycle, to the next stage. We will go through the process of

developing your business plan over the next three days.

Key elements of growth

Sales Growth Funding Developing Systems Ongoing Training & Development Human Resource Base

Key elements of growth

SALES GROWTH

Sales growth is primarily through two basic activities:1. Getting New Customers

Marketing strategy Expansion of number of outletsBuilding networks & partnerships

2. Retaining Existing Customers Service delivery System for retaining customers/repeat business

SALES GROWTH (cont.d) Sales growth process

1. Identify customer for whom our product is a need (vs want)

2. Identify niche market (segmentation)

3. Develop Marketing strategy

Key elements of growth

FUNDINGDebt Funding

1. Transaction-based funding (i.e. order finance, invoice discounting). 1. Loan repayment is based on a specific, identifiable transaction2. Suitable for Existence and Survival stages

2. Fixed term funding (capex, term loans, working capital)1. Loan repayment is based on cash flows of the business2. Needs business plan3. Suitable for businesses that have gone beyond break-even (survival),

success +

Key elements of growth

FUNDING (cont.d)Equity

Normally applies from Success stage onwards

Proven, viable business model

Used to achieve rapid expansion, especially for take-off stage

Would result in owner equity erosion if carried out at existence or survival stages

Key elements of growth

SYSTEMS Systems enable us to measure and manage performance

Systems need to evolve as the business grows

We start with basic systems, and go all the way to extensive and well-developed systems

Systems should be appropriate and relevant to the stage of growth

Common misconception that destroys businesses is to start with full-fledged systems in infantile businesses

Key elements of growth

ONGOING TRAINING & DEVELOPMENT

Self-developmentDevelopment through interaction

with others

Key elements of growth

Key elements of growthFOUR STAGES OF LEARNING

SELF & SOCIAL AWARENESS

Key elements of growth

HUMAN RESOURSE BASE People are critical as the organisation grows Having the right people enables growth; the reverse is also true Common HR mistakes within SMEs

Hiring unqualified/incompetent staff for task

Nepotism

Over-reaching

Must be able to engage, direct, manage staff Manage mind-sets, expectations, advancement Offer what large organisations cannot Mentors, Board of Advisors/Directors

Key elements of growth

HUMAN RESOURSE BASE

Key elements of growth

Tailored Growth Strategy

Each business is unique, even if doing similar thing to others.

Unique competencies, talents, abilities, visions Focus on, and develop strengths, minimise

weaknesses and diversions PASSION!!!

SummaryThere are three essentials for growth:

Growth Strategy (Vision setting)Business plan (Short term plan)Action plan (Implementation plan)

Our programs help you put these in place

https://www.smeaz.org.zw/

“Luck is when opportunity meets preparedness!”