While a start-up business plan sets out a broad, hypothetical overview of operations, finance and projections, a growth plan gives a much more detailed and accurate idea of how a business will manage and sustain momentum.
For scale-up businesses, a growth plan details how they’ll adapt to a greater workload while maintaining performance and achieving their goals. However, growth plans often need to be devised in the midst of rapid growth and change, so how do businesses do it? What key considerations need to be taken into account? What are the investment questions they should be asking? And what exactly does the plan need to include?
Someone who knows the answers to all of the above is Steve Gilroy. The former Chief Executive of Vistage UK, Steve has been a managing director and CEO for numerous companies as well as running two businesses of his own. He started the first ever Vistage scale-up group and currently runs two chief executive groups in London. His insights and wisdom help demystify the process of scale-up planning.
Are you ready for scale-up?
Before you work on your growth plan, you need to ascertain whether the business is ready for it. Dreams and aspirations are fine, but the reality is important: some businesses are not ready to scale. This isn’t guesswork, there are some key attributes to growth companies.
The first things to consider are your product or service and making sure you have a clear idea of your target customers. As Steve says: “Sometimes a business hasn’t done enough work on establishing their ideal customer. Other times their value proficient proposition is not clear enough or their product is just not well-positioned enough to take advantage of the growth opportunity, so work needs to be done there before scaling up”.
The second thing on Steve’s checklist is the business model. “Often, an existing business is attempting to scale, they’re using the model they’ve used from day one,” Steve explains. “They haven’t considered the fact that there may be a different way of selling and delivering their service, which may, in the long run, offer a much bigger opportunity or an opportunity which can grow much faster”.
The third thing on the checklist is finance. “If a business is going to consume cash to grow, or they need investment, what have they done so far in that space? What options have they looked at? Have they really looked at the cash engine of the business and is there a way of growing which will reduce their demands for cash? At the end of the day, have they got access to the finance they need to scale the business?”
The final thing is culture. Having the right culture is crucial for a business to scale-up effectively. Why? Businesses that want to scale need a healthy, vibrant work culture to retain current employees as well as recruiting new ones.
“The culture has to be enthusiastic - and it needs to be open and informal,” Steve explains. “Rigid corporate structures generally are a thing of the past anyway. Internally, the culture needs to be informal, open, have high levels of trust, high levels of challenge, new ideas, a growth mindset - all of these things”.
In Steve’s experience, creating a culture of ownership, accountability and action brings out the best in individuals and helps prepare a business for successfully scaling-up.
“It’s important to have a culture which values quickly reviewing performance, reviewing issues, deciding on the action, committing to the action and taking ownership. These things are rarely in place at an optimum level. Quite often businesses haven’t got ownership and accountability working right. So, it’s a case of identifying whether those things are in place and what tool or technique they need to become more effective.”
Culture is something you can work on at any stage in a business’ lifecycle, but it really helps scale-up businesses if it’s ingrained from the very beginning. For businesses that are ready, what should a growth plan look like?
How can a business prepare to scale and what should be included in their growth plan?
With growth plans, the devil is in the detail. You need to be clear about what you want to achieve, the obstacles that stand in your way and your methods for overcoming them. Steve suggests including the following:
- Vision, mission, values and purpose: What is your long-term, overarching vision for where you want to be and what you stand for?
- SWOT: Have you explored your Strengths, Weaknesses, Opportunities and Threats in detail? Do you have plans and ideas for how to tackle your weaknesses and threats? What about internal strengths and weaknesses?
- Goals: What do you really want to achieve? Do you want to be number one in your sector? Do you want to take a product from £10 million to £50 million in a certain market?
- Market and customer research: How well do you know that market and your ideal customer? What does that landscape look like?
- An action plan: Based on your SWOT, what specific actions are going to help you reach your goal? How exactly will you meet your target? Which markets and techniques will you use to grow sales?
- Define your strategic growth thrusts: These are specific areas of focus that are likely to last for two to three years. How do these planned growth thrusts impact on current markets? If you’re focusing on launching into new territories, what about the UK market? How will you continue to grow here?
Steve believes the key to writing an effective growth plan is to leave no stone unturned when it comes to the methods businesses plan to use in order to reach their goal. “When I work with scale-ups, I get them to identify the technique,” he explains. “What are the steps going to be to go from £10 million to £40 million? I get them to define, explore, evaluate, and effectively, choose thrust areas which make the basis of their plan.”
Ensuring your plan is sufficiently detailed will make it easier to roll it out to the whole company, as Steve explains. “Once they’ve been through the process, they have a thorough, detailed, well thought out plan, which they can use to brief staff, recruit more resource, show investors, and so on. But the real payoff is they can now work against it. It’s then just a case of execution: ‘this the plan I’m working too, and I’m going to measure and track accordingly.’”
Key growth challenges
This planning isn’t without challenges, however, And, according to Steve, there are three fundamental mistakes businesses make when planning to scale-up: “The main mistake I see with businesses is mistaking other plans for a growth plan. CEOs or CFOs may have done a budget or a sales plan and see that as their roadmap for growth. They’re not.
“The second problem is failing to include everyone. While leaders should build the plan with their executive team, they should involve as many people as possible in helping to contribute to it. Quite often they only broadcast the plan to the company once or twice a year. That’s not enough. If the company doesn’t see the growth plan, the people haven’t really bought into it and it just becomes another management fad rather than a realistic, achievable goal.
“The third big problem is when they’ve written the plan but they don’t stick to it. Instead, they get distracted by a shiny new opportunity and veer off course - that’s very common.”
The final problem, according to Steve, is tracking success. Plans only mean something if you can measure them, and you can only measure them properly with structured meetings and structured questions: “Quite often business leaders have meetings where they look at the P&L, have a discussion, write down one or two actions and that’s it. That’s not an effective growth-focussed meeting,” he says.
“If meetings take place but the most pertinent areas are not being focussed on or scrutinised, you can end up missing the wood for the trees. A great growth meeting is one where everyone takes ownership. People, including the business leaders, are all focussed on the top three urgent priorities to either get them back on track or to reinforce more of what they should be doing.
“The first stage of growth is building a solid plan and getting people bought into it. Once everyone’s in, they then know how to execute, monitor and tweak the course. They need to know how to do that quickly and effectively. That’s the second phase of growth planning.”
The results of writing an effective growth plan
“I’ve watched one of the businesses in my chief executive Vistage group follow this growth planning blueprint to the letter. The business leader got his executive team involved, produced the plan and cascaded it well to the business.
“Internally, you can see all sorts of examples of the plan - on the wall in posters and in documents within the company. Their review process is streamlined and focused, meeting monthly and quarterly to monitor success. The company is currently in the second year of execution and they’ve been very successful - achieving 50% plus growth each year in the last two years.”
This checklist success isn’t rocket science, it’s good business. Getting the value proposition sorted, understanding customers and the market, future-proofing your finances: all these things can help you grow. But they can’t work on their own. Two things stand out as key characteristics for scale-up businesses, beyond the business organisation or planning: will and passion.
‘If companies have the will to do it, it tends to also mean they’ve got a passion for what they do,” says Steve. “That’s the thing that stands out for me. They may be lacking the tools and techniques, but they can be taught - that’s where someone like me comes in. I can help them with coaching, strategic planning, growth plans, but if they don’t have the will or the passion they shouldn’t really be looking at scaling-up.’