This white paper will provide small-business owners with a clear understanding of what they should to do in order achieve sustainable growth in their business.

1. Achieving Sustainable Growth
Comprehensive guide to how to grow your small business
successfully and sustainably.

2. Achieving Sustainable Growth
Table of Contents
Introduction..............................................................................Page 3
Planning for Growth..............................................................Page 4
Measuring Performance......................................................Page 5
Analysing Your Business.......................................................Page 6
Choosing The Correct Growth Strategy.......................Page 10
Implementing a Growth Strategy....................................Page 13
Managing Growth...................................................................Page 14
Conclusion..................................................................................Page 15
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3. Achieving Sustainable Growth
Introduction
There has been much debate among business commentators
whether the theory that a business must ‘grow or die’ is true. While
the phrase has some merit, it does not quite fit every business type.
There is a strong argument to suggest the phrase should be modified
to say businesses should "improve or die."
Entrepreneurs are ambitious people, and it is in their nature to
strive to grow their business quickly. Despite the willingness and the
ambition to grow, few businesses do this in an effective and
sustainable manner.
When you analyse the business failure rates, it is interesting to find
out that many businesses that close are growing and hitting their
sales targets. However, the growth achieved was uncontrolled and
resulted in the business overspending and/or not collecting all the
cash they were due.
In these circumstances growth was the reason for business failure.
This white paper will provide small-business owners with a clear
understanding of what they should to do in order achieve
sustainable growth in their business.
Key Elements of Sustainable Growth
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Business Planning
Business Analysis
Choosing The Correct Growth Strategy
Implementation of the Strategy
Growth Management
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4. Achieving Sustainable Growth
Planning For Growth
Your business plan should be the key driver in all of your growth planning. It
contains your revenue expectations, marketing plan and sales plan.
Your business plan should help you understand exactly what you need to do
operationally in order to grow. Targets will be set for your marketing campaigns,
sales conversions and spending.
It is also very important to set targets for specific metrics that will help you
understand your business and measure the success of your growth plans.
Below are some of the key performance indicators KPIs you should set targets for
in your business plan then review performance against.
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Customer Acquisition Cost (CAC)
Average Customer Spend
Customer Retention %
Attrition Rate %
Referral Rate
Sales Revenue
Gross Margin%
Net Margin %
Overhead to Revenue %
Variable Cost %
Ideally a business plan should be a “live” document that is updated on a monthly
basis or when you have identified a significant change in the plan.
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5. Achieving Sustainable Growth
Measuring Performance
If you want to grow, you have to understand your business.
Understanding daily operations is not enough, to understand your
business you need to know the areas that it does well and the
departments that require improvement.
Understanding your business also means you are aware of market,
how strong it is and where it is going. You should also monitor the
performance and strategy of your competitors.
Regular reviews of the metrics laid out in the business plan provides a
business owner with insight to the strengths and weaknesses within
the business and allows them to make informed business decisions.
Regular performance reviews provide you with the knowledge to
improve your business. You should act quickly on the information
from the performance review to eliminate weaknesses and to
optimize your strengths.
Performance management helps you to build a more robust business
model. Growth without a strong business model can lead to problems
because the business cannot cope or finance extra staff or customers.
For example, if your customer growth rate is 10%, but you have a
customer attrition rate of 20%.
To achieve growth you should first to find why you are losing so many
customers and solve this problem. Only then should you proceed and
try and grow customer acquisitions.
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6. Achieving Sustainable Growth
Analysing Your Business
When choosing the correct growth strategy it is important to understand the forces
that affect your business.
There are three key tools to help you achieve this; these are
SWOT Analysis
One of the key tools of understanding your business is the ability to set targets,
review performance and explain variances against your plan. When the variance
analysis has been completed the most effective way to convey its findings to senior
management, investors or external businesses is by using Strengths, Weaknesses,
Opportunities & Threat Analysis (SWOT).
SWOT Analysis is very popular in business plans. However, it is a mistake to stop
using it once the business has been launched. It really shouldn't be limited to just
start-ups, established businesses should use SWOT analysis to ensure they are
aware of factors that affect the business internally and externally.
SWOT Analysis is also good because it is a fairly easy tool to use and can be
understood by all members within an organization.
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7. Achieving Sustainable Growth
Analysing Your Business
Let's go deeper into SWOT Analysis
S - Strengths
After analysing actual performance against
budget/forecast you should state which products,
services or departments are doing well and why
they are doing well.
W - Weaknesses
Similarly to strengths you need to highlight the
weaknesses in your business and the reason why
they are holding the business back.
O - Opportunities
Both internal and external factors should be listed in your opportunities
section. You should be able to quantify the potential upside of maximizing
your strengths. This section should include any market changes that may
positively affect your business. It is not enough for just state the
opportunities. You should go deeper and try to figure out how your
business will capitalize upon them.
T - Threats
Internal and external factors should be listed in your opportunities section.
You should be able to quantify the risk in the business associated your
weaknesses. Similarly to opportunities, you should include any market
changes that negatively affect the business and start to figure out how to
avoid them or reduce the risk.
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8. Achieving Sustainable Growth
Analysing Your Business
Pestle Analysis
PESTLE analysis is a tool to analyze the
socio-economic factors that affect your
business.
Political - Governmental policy and laws,
also look for changes in political ideology.
Economic - Overall Economic
environment, key indicators are the
financial markets, currency markets,
interest rates, unemployment rate and
the inflation.
Social - Track any population or
demographic changes in the region that
your business trades.
Technological - Identify any advances in
technology that may affect your business.
A great example of this is the growth of
Cloud Computing over the past few
years.
Legal - Specific laws that may affect your
business, for instance a change in
employment law.
Environmental - analyze this from the
legal and social perspective to
understand what is expected from your
business.
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9. Achieving Sustainable Growth
Analysing Your Business
Porters Five Forces
Porters 5 forces looks at the
potential threats to your business.
This is a great tool to understand
the factors that affect your
business most.
According to Porter there are five
forces that affect a business in any
market or industry.
Potential Entrants - How easy is it for a company to enter your
business's market or industry. The more difficult it is for
competition to enter your market puts your business in a
stronger position.
Potential Substitutes - Assess how easy is it for your
product/service to be replaced.
Power of Suppliers - Does one supplier have a monopoly on
supplying the product that your business sells? If so the supplier
has bargaining power over your business.
Power of Buyers - Think about how essential your product is to
your customers, is it easy for them to choose another supplier.
The easier it is for your customers to choose another supplier,
the more power they have over your business.
Level of Competition - How many businesses are you
competing with? The more competitors your business has the
more in danger it is in.
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10. Achieving Sustainable Growth
Choosing The Correct Growth Strategy
Choosing the correct growth
strategy is crucial to your actual
plan.
There are many available to
business, the important thing is to
choose one that fits your business
and is sustainable.
For instance if you have cash flow
problems and want to grow sales by
reaching new markets.
A far more sensible and cost
effective plan would be to invest in
an online sales platform rather than
opening a new office or location.
If you choose the wrong strategy you
could be setting up your business to
fail.
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11. Achieving Sustainable Growth
Growth Strategies
1. Open up in a new location
4. Form an Alliance
If your business is doing well, you
should think about opening in
another location with the same
demographics as your current store
or office.
Forming a strategic alliance with a
similar or larger company will allow
your business to reach a broader
market.
5. Diversify
2. Franchising
If your business model is working
and you have a well established
brand, franchising your business is a
low risk quick and inexpensive way
of growing your business.
Franchising is also a good way of
raising capital without approaching
private investors or banks.
3. License your Product
When a larger company licenses
your product, they take over the
manufacturing and distribution of
your product. The company that
licenses your product is called the
licensee, and they pay you royalties
on any sales of your product.
Diversification can be done in two
ways, you can market your existing
products to a new market or sector.
6. Route to Market
You can grow your business by
increasing your sales channels.
Think about increasing your partner
network, try and find new stores to
buy your product.
Another great way of growing your
business is by increasing your online
presence, try selling your goods on
eBay or Amazon before opening up a
stand alone online shop.
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12. Achieving Sustainable Growth
Growth Strategies
7. Merge with another or buy
9.Increased Marketing
If you want to grow your business
quickly and you have enough
capital buying or merging another
business may be an option.
You can increase market
penetration by running additional
marketing. Ensure your marketing
is measurable.
8. International Expansion
10. Delegate
Many small business owners
discount this as an option, but
there is no reason why small
businesses cannot become global
businesses.
By delegating less day-to-day tasks
to staff this should give the
managers/owners more time to
plan and implement growth.
11.Develop New Products
8.Promotion or Price Change
To increase market share you
reduce your prices. However this
should be done with great caution
to ensure you keep profitable.
Release a market leading product
to grab a bigger share of the
market.
12. Turn Your Customers into
Salespeople
This is an increasingly popular
growth strategy. Leverage the
power of referrals by offering your
existing customers an incentive to
recommend your products to their
social groups.
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13. Achieving Sustainable Growth
Implementing a Growth Strategy
Once you have decided the correct growth strategy in place you have to make sure
you can implement the plan.
The next stage is really to ensure that you have all of the prerequisites to achieve
the growth, otherwise you plan will never be realised.
Before you start your implementation you should ask.
Do you have the cash to buy extra stock or invest in a new website?
Are your sales force trained to sell new products or services?
Do you have enough staff to handle increased customer demands?
To implement your growth plans you need be comfortable you are not
overstretching yourself and not jeopardizing existing customer in the search for
new ones.
Implementation Checklist
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Growth plan has been approved and is funded
Key performance indicators for growth plan have been defined.
Staff understand the plan and their role.
Your business systems and staff can handle increased demand.
You have allocated time to monitor plan against actual results.
Additional staff training has been planned.
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14. Achieving Sustainable Growth
Managing Growth
To manage your growth plan effectively you need to:
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Track actual results and metrics against your plan
regularly.
Update your plan if there has been any significant
changes.
To ensure staff will deliver success ensure they are
motivated, reward them if meet targets.
Make sure that your plan is communicated across all
of the business and everyone knows what their tasks
are.
Do not focus solely on the growth plan, make sure the
business is still performing in all other areas.
Make sure your cash flow can sustain your growth
plan.
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15. Achieving Sustainable Growth
Conclusion
Growing a business is not easy, it requires funding, detailed
planning and monitoring to ensure you do not over stretch
your resources.
Once you build a sustainable growth model, it can reap your
business tremendous rewards for your business.
The work does not stop with just managing growth. As your
business grows it becomes more complex and requires more
management support with strategic planning, business
systems and performance management.
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16. Achieving Sustainable Growth
About Us
We focus on helping small businesses achieve better results
through business planning, performance management, operational
efficiency and financial management.
Our clients typically grow their business by 20%-50% over the
year while cutting costs by 30%
We provide our clients with four key services that allows them to
access to our expertise on their own terms and schedule.
These are:
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Business Mentoring
Business Consulting
Micro-Consulting
Outsourced Business Analysis and Financial Management.
Contact Us
3rd Floor, 207 Regent Street
London W1B 3HH
Email: contact@arinobe.com
Tel: +44207 286 7829 / +44 7825 002 908
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