Preparing Your Business for Growth
Recently, we wrote that the macro-trends over the past 100 years point to 2015 as the start of a growth cycle. If you plan to grow your business during this period, it is critical that you have alignment among your stakeholders (i.e. investors, employees, suppliers and customers). This alignment is strengthened when you communicate a vision, annual goals and key strategies for your business.
Successful companies have a vision. The vision is the “why” for a business. The vision explains to your stakeholders why you are in business. In your industry you may want to be the biggest or the most profitable or you might want to provide the best service. Whatever it is, you need to be sure you communicate the vision to your stakeholders. From your investors to your employees and from your suppliers to your customers or clients, the vision will be a guiding light, the true north, for where your company is headed and why the business exists.
Recently, we visited a battery distribution business. There was nothing special about the products they carried. Many distributors across the country carry the same products. However, the owner of this business had a vision about service in the industry. His vision was to be his customer’s source for total power solutions. While it was not a huge business, you could feel the positive energy from the employees in the office as you walked around. It became clear as the day went on that management and the employees of this growth company tried to live the vision.
Communicating your vision is the first step for getting alignment. Once the vision is set, you need to work with your management team to establish annual goals for growing your business. These goals need to be communicated throughout the organization. Annual goals tell the organization what the owner and management team see as important.
SMART goals are the way you should develop your goals. Goals need to be Specific, Measurable, Achievable, Relevant and Time-bound. Thus, one annual goal might be to grow total annual net sales 12% in 2015. In this example, “total net sales” is what you are measuring and “12%” is the specific target you hope to achieve or exceed. Assuming your industry is growing and you are also taking market share, we will assume that 12% growth is achievable. Double digit net sales growth is relevant to your business and measuring sales growth for an annual period is time-bound.
While visiting the owner of a manufacturing facility, we were impressed to see that he had written his 2015 annual goals on the conference room white board for everyone to see. He was proud of the growth his company had achieved in 2014 and wanted to be sure his managers and employees were reminded of the 2015 goals each week during staff meetings.
Once your vision is in place and the annual goals have been set, the management team needs to develop the key strategies for achieving these goals. Business strategies are “what” your management is focusing on to pursue the vision. Often management teams have too many key strategies. It is important to keep the key strategies to a manageable number. Usually, three to five key strategies for the year is appropriate.
Key strategies should focus on what is important for your business in your industry to successfully achieve your annual goals and to move your company towards your vision. Key strategies might be about launching new products or securing new account distribution or reducing costs for manufacturing. No matter what your focus, these strategies should be the most important strategies for achieving your annual goals and ultimately driving your vision.
Before rushing out to manage your business, be sure to align your stakeholders. Take the time to develop and communicate to your stakeholders your company vision (why), your annual goals the company is pursuing and the key strategies (what) that are being focused on to achieve the goals. Success is easier to achieve when stakeholders are aligned with your vision, goals and strategies.
Originally published in the North Bay Business Journal on May 25, 2015