Growth: It’s Much More than Revenue

Well, to be successful, a business must have both profitability and growth. Profitability keeps the lights on in the short term, whereas growth ensures a business can remain profitable in the future and continue to survive in the market long-term.

I’m an advocate of implementing smart growth strategies that set up a business for long-term success. I’d like to speak a little on the importance of growth in a business and how you should decouple the idea of growth and immediate revenue when making business decisions that affect the future of your company.

How I View Growth

Growth is something we strive for each and every day. Throughout our lives, most of us make efforts to grow as people.

Personal growth can mean different things to different people. It can mean being more physically capable or more skilled at our hobbies. We can grow as people by being better at dealing with others, or we can have humanitarian goals to help the world around us become a better place.

‍Growth Doesn't Always Mean Increased Revenue

It’s also true that, in business, growth has many meanings. A company can grow in revenue, market share, user numbers, and brand visibility. It can improve profits, increase physical locations, and take on more staff. All these things can certainly be considered growth, and we shouldn’t consider immediately-available revenue the be-all-and-end of business growth.

Efforts made to facilitate growth must be sensible, measurable, and ultimately profitable. In short, the right growth choices should open clear opportunities and new possibilities for the future of the company.

Business growth has become synonymous with increased revenue in some circles. But this is incorrect—there are many ways you can grow your business without immediately increasing turnover or profits.

Growing your business is a way to gain access to new opportunities. By sensibly growing your business, you have more options for revenue streams, which ultimately results in more profits.

Growth is an Agile Process

Growing a business can sometimes mean moving into relatively uncharted waters. You might see an opportunity to grow in a direction that your competitors haven’t yet tried, to meet a particular need of the consumer and fill a gap in the market. But this comes with a certain amount of risk, as you can’t be entirely sure that the plan will pay off.

Smart business growth needs to be iterative. Your process should be agile. You must be willing and able to change how your business grows as the information on your efforts begins to roll in.

You will make mistakes, but this is OK if you’re willing to adapt. You’re working in an area that has imperfect information, so it doesn’t usually make sense to jump in with both feet. But with the right attitude, even when your growth efforts aren’t immediately panning out you can course-correct and steer your company in the right direction.

An agile process for business growth is a cycle with four main steps:

Discovery – Research, measure, and test whether a growth strategy has strong potential for future revenue.‍

Planning – Outline the steps you’ll take to create growth. Allocate resources, and set timescales.‍

Execution – Put your plan into action, measuring with quantifiable metrics whether the plan is building growth as expected.‍

Evaluation – Check whether the plan is working and what could be improved.

Once you’ve iterated through the four stages, begin the discovery stage again with the newfound knowledge you’ve acquired. This way, you can perfect the process and reap the biggest benefits.

Growth Must be Measurable

How do you know if your business or project is growing in the right direction? You must set goals that are measurable and quantifiable. Define key performance indicators (KPIs) and performance metrics that you can use to identify which of your efforts are working and which need work.

Not only must you measure which efforts are working, but you must also measure the effect the type of growth you’re creating is having on your business or your potential business.

For instance, you can have a fabulous response to a new marketing campaign, but if the response is coming from people unlikely to ever buy your product or services, you may need to re-think your strategy.

Ongoing measurement of your KPIs means you can quickly put more resources into the strategies that are working and reduce spending on those that aren’t, making for a highly effective approach.

Your Efforts Must Pay Off

Many companies push for fast growth without question. Bigger is always better, right?

No, it is easy for a business to grow too quickly. Open retail stores across the country before you’ve established your brand, for example, and you could quickly go out of business because of the increased expense.

Or, to take another example, if you build up the number of followers your brand has with a social media marketing campaign before you have a strong idea of who your ideal customer is, it can mean a lot of wasted time and resources, as you’ve not been marketing to your key demographic.

Startups have become notorious for putting growth before profits with abandon. In some niches, and with a bit of luck, this can pay off, as the business that grows the fastest ultimately becomes the authoritative player in the market and reaps the benefits. But you must always have a strong vision of where the revenue will come from in the future.

Every resource you spend building growth must be linked to a clear future opportunity. You must first exhaustively research whether a certain growth vector has a strong investment case.  

Takeaway

A business must always continue to grow and adapt to the market. Growth can lead to increased revenue, but making efforts to grow is not just about getting immediate new revenue. Instead, it’s about intelligently choosing the growth strategies that build opportunities and options for your business in the future.  

Both revenue and growth are important, and a business must maintain both growth and profitability to survive.