How to Avoid Certain Decline When Growth Becomes Elusive
If you’re not growing you’re dying, the saying goes, and in business, whether you like it or not, standing still is disastrous. But what if you just don’t seem to be able to grow?
We met with a business last week, and growth is eluding them. They need to do something different or they’ll fall into a terminal decline.
But where should they look to make changes? We took a look at four different aspects of their business to identify where they should focus their attention. If growth is eluding you too, here are the four areas to look at in your business.
Maybe You Don’t Have the Right People on Board
This takes into account employees, suppliers, partners, advisors, etc. You’ll know this is a problem if when you look at your business relationships, you don’t like what you see. It may even make you feel unhappy. Trust your gut and, at least at first, try not to overthink it. You’ll know if something seems off within your team if you’re not seeing results and things just don’t feel right to you.
Hiring the wrong people is one of the costliest mistakes a business can make, and 41 percent of hiring managers say that it’s a mistake that can cost thousands of dollars. The wrong suppliers and partners can also be an incredibly expensive problem, since it could create communication issues and other problems that ultimately affect your customers.
Aside from simply trusting your gut, there are a few other ways to tell if a relationship between you and your employee/partner/supplier isn’t working out. One of which is that the same mistakes are being repeated constantly, even when you’ve told this person about the errors and gave them ways to improve. Another is that your working styles clash and you simply can’t accomplish anything when working together. And finally, if a person just doesn’t seem too interested in their job with you, it’s a sign they’re not contributing their best work to help the company grow.
This may be the hardest area to deal with, but if you’ve got the wrong people on the bus, you need to stop and let them off and get some new ones on your team.
Maybe Your People Are Great, But Your Strategy Is Wrong
If your strategy needs improvement, you need to go back to the drawing board and think again about what your customers want or how to get it to them. Some mature businesses need to look carefully in this area, because even though you may have been doing things the same way for decades, times change and your strategy should evolve with them.
The business we met last week is in a sector that was high growth in the past, but times have changed and they’ve shrunk in size. Their suppliers “don’t make them like they used to” and their customers have different buying habits now. The whole industry has changed completely. They need a new strategy – and quickly.
This is especially prevalent in areas where technology has grown significantly. Brick-and-mortar retailers, for instance, need to come up with a different strategy than they may have used in the past to keep up with e-commerce giants like Amazon. Online retailers aren’t going away anytime soon, so everyone else will need to evolve in order to stay competitive in today’s online-focused landscape.
Maybe Your Tactics or Execution Are Flawed
You’ll know the difference because your top-line sales may well be going up, but your profits aren’t. Another sign that your execution isn’t what it could be as your teams regularly do heroic work to get the job done.
A significant problem in many a growing business is re-work. As the demands increase, mistakes and flaws in systems appear. Complaints and faults creep in, and to appease their customers, businesses have to offer to repeat the work or give a replacement item or a discount on the next order, etc.
While it’s completely normal for a company to have to fix a few mistakes here and there, if it’s a recurring issue that starts happening more frequently than usual, it may be the reason your company is unable to grow.
Any of these free discounts of time or materials reduces profitability. If any of these scenarios sound familiar, look at your systems and the efficiency of what you’re doing and see if you can improve them to maximize efficiency and productivity.
Maybe Your Business Doesn’t Have the Financial Requirements to Support Growth
Growing a business takes cash. Everybody realizes that to start a business takes some level of capital, but fewer businesses recognize that growing a business also requires money.
Assuming your business is profitable, there will be a specific growth rate that is self-supporting. This is based on your margins and how quickly you turn the amount of money you are spending into the amount of money your customer spends with you.
For example, a hairdressing salon may have the financial capability to grow quickly (if they have capacity) because their customers pay them before they have to pay their hairdressers’ salaries.
In contrast, a manufacturing company with lots of components in inventory may not be able to grow as quickly because they have to pay for the components before their customers pay them. To grow faster than your self-supported growth rate you will need a capital injection of some sort.
While remaining stagnant as a business might seem more appealing than losing sales and seeing profit steadily decline, a lack of growth can be just as dangerous. While it may be tough to see exactly what’s causing the issue at first (and there may be multiple reasons why your company isn’t growing), start by examining your business for any of these four problems.
From there, it will become easier to pinpoint exactly where your problem lies. It won’t necessarily be easy to make changes to revamp your business and get it back on track in a growth phase, but discovering the problem itself is the first step in solving it.