Too many companies target growth at any price. What my time as Sir Richard Branson’s right hand man for starting and growing Virgin’s start-ups taught me was that smart companies only target profitable growth.
Growth can come from being opportunistic but usually comes from these three sources:
1. Organic growth;
2. New product launches; and
3. Joint venture opportunities.
The critical requirement for all these opportunities is to think it through carefully then go for it and this requires some number crunching. Look at incremental revenues and costs, and don’t forget the costs; that’s the number one issue.
It sounds simple, but in the dizzy heights of targeting sales, businesses get caught up and forget the basics.
Growth is needed, but not at any price. Provided you think through both sides of the equation, you should drive incremental profits and not revenue, which can lose you money.
Organic growth covers all the typical elements of sales, from branding and PR to database management and affiliate marketing.
As long as you look at all new costs, are realistic about your revenue and, critically, are prepared to test properly, this is an excellent way for SMEs to grow.
New product launches
New product launches are very exciting. All products have a natural life cycle and you must be continuously innovating or competitors will catch you out.
Businesses are often frightened to launch a product in case it erodes sales of their existing product range. Better to cannabilise your own sales than let someone else gain, so be brave.
The concept here is to exploit what you already have. Make both your marketing and production assets sweat. From a marketing perspective, can you market to your existing database? This is normally a great way to undertake a test and get some traction.
Down the track, if the new product opens new channels, then your old products can follow. This is a very profitable method and one I have used successfully in my own ventures and for earlier stage businesses for Unilever and Virgin. At Virgin, this worked very well across all new launches, particularly in financial services.
Joint venture opportunities
Competitors in the modern world are often teaming up. Opportunities are everywhere: a joint launch or a launch using some else’s infrastructure and whitelabeling possibilities are all opportunities to consider in this competitive world.
However, joint ventures need careful consideration. One I did at Virgin in the gym area took over six months. Write a plan of what you want to achieve, agree whom does what and how you will share profits.
At the same time ensure everything is incremental and transparent. Lastly, ensure you have a get out clause if it’s not coming together.
Brad Rosser is a serial entrepreneur who helps entrepreneurs build successful businesses and Sir Richard Branson’s former right-hand man for start-ups.