Growth For The Rest Of Us

The projections made great sense! The numbers were all based on reasonable expectations, and yet here we are – again.

Year after year I went through this humbling reality, facing the fact that the revenues I had predicted were not attainable.

The stress of setting growth rates for your business can be overwhelming. You want to motivate and challenge people with stretch goals (we’ve been told how important they are) and also impress shareholders with your potential. But underlying it all is the dread that these numbers may not be based on solid assumptions.

I mean projections are just that – projections. And they can have a big impact on the environment of your company. If you are not meeting numbers – even if they aren’t realistic – it can cause a great deal of pressure, more slumping than stretching.

Cycling through the glacier to blue skies in Iceland

In my years of consulting – and with my own businesses – I have found that most projections are simply not realistic. There are so many biases in them that you begin to question if they even matter. To be honest, growing by 20% annually (not even the hyped up 50% or doubling promoted in this start-up mentality) is generally out of reach for almost all entrepreneurs. We are setting ourselves up for disappointment. It isn’t failure but a lack of informed thinking that creates projection issues.

Projections aside, growth matters! But less than 5% of companies achieve an annual growth rate of more than 5% for more than five years. So, most companies face stagnant periods which are often very lengthy. We expect companies to grow steadily year over year but it is just not reasonable. Our expectations are based on a falsehood.

So, where should you focus?

As a cyclist I am fixated on my numbers and always looking for ways to improve my performance. But, from trainer screens to power meter pages, there are so many possible numbers to gauge, it’s tough to know where to focus. I can actually get lost in the numbers and see no improvement at all despite a lot of effort.

Similar to cyclists, entrepreneurs believe in achievement and growth. We are always looking to the horizon and measuring how far we have to go rather than how far we have already come. And with that mismatch in vision, we can actually stall out and plateau – we can become stagnant rather than scaling.

Companies must create value, and not just for clients and customers. Shareholders are very important, and they value growth more than any other business accomplishment. As owners, we need to resolve the growth challenge to maintain shareholder interest and investment, as well as continued viability.

I believe most companies fail to meet the growth challenge due to a lack of focus. This was the case in my own business. We stalled out despite our huge efforts and many (I mean many) projections. So, to jump-start a flagging company, it begins and ends with focus. Stepping back and looking at your new starting point may be the most important factor. Where the business starts from will impact the overall recovery to growth.

The question is really whether a stalled or stagnant company can still become a high-growth business. The answer is yes! But only 20% of downward dog companies recover their growth flow. The businesses that do get back on track share four elements in common. Understanding where a company is starting from and how to apply those four elements is critical.

So, to boost your growth rate, let’s step back and look at your starting point. What is your competitive positioning right now? Which products are you selling most of and least of, and what are the margins on each of them? Assess where you are and how cash flow is generated and moving through your business.

From there, you must earn the right to grow. These are the four key elements to getting back on the road to growth:

  1. Focus on where the most value can be created. What products or services do customers value the most and pay for?
     
  2. Next, know your advantage by understanding clearly and deliberately what you do well, and own it. Sometimes you may be surprised by what customers see as your expertise, what makes you unique and valuable.
     
  3. With clarity of value and advantage, you can then expand your field of vision and have the courage to look outside of what you have always done, see where the opportunities lie, and think about where you need to be. Be clear on where growth lies and what constitutes a reasonable expectation.
     
  4. Finally, with a vision for growth you can translate that future to focused actions. In a nutshell … where are we, what needs to change, what does it need to change to, and how do we make that change…and now let’s do it!

Changes in top line growth result in a multiplier impact on bottom line profitability. A 2% change in revenues can have a dramatic effect on profitability. And profitability is the key to the heart of the shareholder (yes, making money matters – a lot).

Every company has the potential to grow at a competitive rate. The key is focusing deliberately on where you are right now.