4 considerations when planning for growth
Growing a services business, such as an agency, digital studio, or consultancy, is challenging because there’s typically a great deal of effort required just to sell and do the same amount of work as the previous year. In fact, there’s no guarantee that the business will even achieve that milestone.
Another challenge is that the journey to revenue recognition almost always involves more than just the sales person. Whether it’s “solutioning”, “scoping”, and/or “pitching”, most deals require otherwise billable resources to dedicate time to non-billable sales activity. This makes it imperative for these businesses to continually balance their efforts invested toward sold work (i.e., the backlog) and growth opportunities (i.e., the pipeline).
If this sounds like a familiar issue, here are four (4) considerations to keep in mind when planning for growth. As someone who loves metaphors, I’ve drawn on some imagery and examples from my enthusiasm for the sport of open water swimming to better illustrate these recommendations.
1) Align on a visual map
A picture is worth a thousand words. Like any journey involving a team, it’s critical to align on both the destination and the route. Take the time to plan iteratively with your team so they understand the route choices that are being made and can commit to the rigors of the journey.
Your map needs to have waypoints (and ideally the ability to adjust course). How will you “sight” your progress throughout the journey? Do you need to adjust and, if so, in what direction. The typical growth planning cycle is one-year, having quarterly or shorter increment waypoints helps reduce the risk of getting too far off course with too little time to adjust and adapt.
2) Know the currents and the conditions
- A current and a swell are different; you’ll need to know what’s happening to know how to react
- Conditions change rapidly, so timing is everything; be prepared with alternate routes
- Depth is important to know, but rarely needs to be acted upon
It’s worth noting that this second step needs to be incorporated iteratively into creating the macro plan and visual map with waypoints from step one. Also, since these factors are dynamic, they should be front and center to ongoing progress checks and the iterative growth planning that happens throughout the year.
What are the fast moving currents, or trends, that are relevant to your business and do they create opportunities or challenges? Similarly, what do the broader conditions, or business climate, that you operate in look like? COVID-19 is an extreme example of this. It has impacted several macro business conditions, which likely influence various currents/trends that are relevant to your industry.
The importance of these currents and conditions cannot be overstated. This spring, I started training for the Mighty Mac Swimbefore it was cancelled due to COVID-19. The swim is approximately 4 miles, a course that follows along the Mackinac Bridge as swimmers traverse the Straits of Mackinac between Michigan’s Lower and Upper Peninsula. While 4 miles may sound intimidating to non-swimmers, some readers likely view that distance as only moderately difficult. However, it’s the tough and highly volatile currents and conditions of the Straits of Mackinac that make this one of the most challenging open water swims in the world, and I was creating my training regimen accordingly.
Take that same approach when planning growth, particularly when it involves entering new markets, bringing new products to existing markets, and/or broader diversification per the Ansoff Matrix. What worked well for your business in one market may be harder than you think to translate to another. The customer, that loves your current service offering, may be locked-in with inferior substitutes that make gaining traction with your new offering quite difficult (even though you wholeheartedly know and believe they need it).
3) Need velocity to forecast milestones
If I want to tell a friend when to expect to see me cross the finish line on the beach, I need to be able estimate how my velocity will be impacted by the factors listed above to estimate completion. The same is true in business; leaders want to know when deals are going to close so they can make other decisions.
Navigation is predicated on a combination of data and tools. Whether that’s as raw as using a few stars in the sky and one’s mind, or as robust as a GPS-based smart device, planning for and navigating growth is no different.
The good news is that like any other technology, the tools have come a long way. Configurable dashboards are now ubiquitous and they help surface pipeline data to make it more actionable including fundamental information such as:
- Total and weighted pipeline
- Visual representations of your pipeline by sales stage
- Filtered snapshots for specific offerings, teams, and/or individual-reps
- Attribute specific views (e.g., Top Opportunities, Win/Loss, Stuck Deals)
In addition to these fundamentals, leaders need additional information to forecast vs. report on growth. A few essentials that come to mind include:
- Win Rate
- Conversion Rate
- Sales Velocity
It’s worth noting that while Sales Velocity is a relatively simple concept to grasp (essentially Win Rate over time) and formula to calculate, it is still very rare to find organizations where this information is readily available for leaders and their teams.
4) Guides are better than waypoints
Over the years, I’ve done a number of open water races, but very few allow the swimmer to have a guide boat (a kayaker who has a better vantage point of the course). As someone that’s done both, having your own guide is so much better.
An example comes to mind from the Kingdom Games in Vermont where my brother was actually able to be my kayaking-guide. About halfway through the race, I remember being around a small group of no more than a half-dozen swimmers. Looking up to spot my progress, I noticed a significantly larger group of 15–20 swimmers on a different vector. I quickly shouted “are we off course, do I need to follow those guys?” and remember a very clear and confident “No, keep going this way! You’re on the right course — don’t worry about them.” And that was it; I put my head down and pushed forward confidently, which resulted in an award for that race which I would have never won without the benefit of my guide.
Perhaps this metaphor is applicable to your business as well, and you likely already have a few guides that you rely on for various aspects of the business. Whether you need help with knowing what to do or the additional bandwidth to devote time to actually doing it, I encourage you to consider whether partnering with me as a fractional growth leader could benefit your business.
Beyond these four considerations, another useful tool for those currently in a business planning and prioritization cycle is to take a moment to plot where your firm falls on my Growth Maturity Matrix. The more hard data one uses to complete the exercise the better, but most business leaders know in their gut which quadrant they’re in instantly. If the Growth Maturity Matrix surfaces Sales Process and a more systematic approach as a potential opportunity for your business, I also recommend reading my post that explains “What is a growth system?” and why they’re attractive to businesses.
Please contact meif you have questions about how to best apply these considerations to your business, and how I can help create a growth plan for your business and/or optimize the execution of it.
NOTE: This article is also published on my website blog.