Business Growth Factors

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Ideally, a growth-oriented company strives to achieve “venture growth.” This means that, at a minimum, a business has to increase its value 5 to 10 times, in 3 to 5 years.

The two business growth factors that enhance a company’s value are revenues and profits (see our discussion on Business Value).

We work with our clients to implement systems that optimize the likelihood that specified growth targets will be achieved. The growth targets we have identified are based on statistics generated from the “Inc. 500” and the American Business Conference lists. These statistics form the basis for our targets for venture growth companies, as follows:

Current Annual Revenue Level	Annual Growth Rate Target
$250,000 - $1MM	250%
$1MM - $5MM	150%
$5MM - $10MM	100%
$10MM - $25MM	50%
Above $25MM	30%

These targets will stretch a company’s objectives, which is the intent. Our research shows that they are achievable as profitability numbers improve.

• High revenue growth rates are possible and desirable
  
  
  1. The biggest mistake entrepreneurs make is not to think big enough in terms of creating value.
  2. The E-Myth: The second biggest mistake most business owners and managers make is to work in their business, not on their business.
  3. The third biggest mistake many business owners and managers make is not to take more advantage of the power of partnering and networking.
  
  
• The main keys to business growth are:
  
  
  1. Customer service and satisfaction are top priorities.
  2. Quality is the name of the business game and always will be.
  3. Creating value is what owners and shareholders come to understand and want.
  4. Continuous innovation makes business both rewarding and valuable.


• The core processes that are the mark of top-notch leadership and management, and will result in business success are:
  
  
  1. Basing decisions on knowledge and facts rather than opinions.
  2. Balancing short-term with long-term considerations.
  3. Seeking and implementing the right balance in business values and operations.
  4. Being systematic, focusing on results and working to improve continuously.
  5. Getting things done on time.

If you are looking for a simple business growth recipe, give it up. There is no simple way to grow a company fast. That is not the same thing as saying that it is impossibly difficult, or that there are no principles and factors that foster business growth.

The paradox of business growth is that it is at the same time easy and complex. In an effort to demonstrate this paradox, we will list the basic dimensions and many factors that affect business growth. Individually, each is simple and reasonable. All of them together, however, are very complex to implement. Our job at Business Growth Partners is to assist clients to reduce the complexity in their businesses and make things easier to achieve both immediate and sustained growth.

At Business Growth Partners we believe that just about anyone can grow a business quickly and profitably. Few do because it takes hard thinking and hard work.

From its inception, the company focused much of its efforts on research and development activity to:

• determine the facts about business growth and how it can be fostered, and
• design comprehensive systems that can more effectively generate business growth.

Our main focus is to work with growth-oriented companies to analyze and implement what has been learned from years of unique exposure to business success and failure. In addition to management and innovation, Business Growth Partners also focuses on the use of information technology, the Internet and partnering relationships as effective means to promote rapid business growth.

The Mindset Dimension

• Do you have the right attitude toward business growth?
• What do you know about business growth?
• What are you willing to do to grow your company rapidly?
• Do you really know what you don’t know?

In our experience too many entrepreneurs approach business growth as dilettantes. They just wish for results without wanting to do the hard studying or thinking that is required, but do want to control the decision making. That mindset never works.

The Management Dimension

• Is management trustworthy?
• How strong is corporate governance?
• Is there a good plan?
• Is management quality-oriented?
• Is management innovative?
• Are business activities tracked and and related to results?
• Are personnel focused and are things done on a prioritized basis?
• How productive is everyone?

Good managers balance long-term goals with short term requirements and are able to get the most from people. There are very few independently superior managers, which is why a management team is usually necessary to grow a company successfully.

The Marketing-Sales Dimension

• Is the market for your product or service large enough?
• Are you customer-oriented?
• Does your company have at least 3-4 competitive advantages?
• Is your company sales-driven?

Business growth requires a sufficiently large market and at least several edges to gain market share.

The Financial Dimension

• Does the business focus on increasing the valuation of the company?
• Does the business emphasize revenues and profitability?
• Is spending tightly controlled and related to sales and profits?
• Is the financing plan clearly related to growth requirements?

The Operations-Execution Dimension

• Is there a system for interrelating results with respect to quality, profitability, activities and employee-management accountability?
• Is the system clearly communicated throughout the business?
• Are incentives related to performance?

The five dimensions and related questions outlined here offer our perspective on the major components of rapid and sustained business growth. To pull all these together requires in-depth understanding, broad experience and a systematic approach.