Posted on Monday, 31 March 2014 in Business Skills

Growth problem or strategic shortfall?

For an entrepreneur, growth is an issue that is always top of mind – be it growth of the bottom line, client base, products or profit. 

 

In an article posted on Entrepreneur SA’s website, business expert Kevin Mackenzie points out that the response a reaction to lack of growth in a business is almost always to change tactics – a new marketing strategy, increased focus on sales,  geographical expansion or even product extensions. 

 

Before one looks to these solutions, Mackenzie argues that the underlying reasons for the lack of growth need to be identified and addressed. There are usually a number of factors at play including the following:

 

•Longer sales cycles

•Price sensitive customers who are seeking better value

•Increased competition in the market

•A shift by customers to in-house services

•Customer retention issues

•Staff retention issues

•Flawed business models

•Limited returns on innovation investment

 

He adds that investigation of these factors will also reveal whether the business is experiencing a problem with growth, or one of strategy. 

 

Growth problems, he believes, are unusual. They tend to take place in a business where there is a scalable business model within a stable and viable need state, and yet new customer acquisition and revenue growth are below the growth rate of the market. 

 

More often, a business’s failure to grow almost always lies in a problem within it’s strategy. For Mackenzie, a sound strategy will ensure strong business growth. Issues to consider include products and services that lack relevancy in today’s market, a lack of competitive differentiation and an inadequate  skills base.  

 

The solution? Stop thinking about growth and start thinking about bettering your business practices. Here it may help to consider new value propositions, as well as the acquisition of new competencies and capabilities. 

 

Successful businesses that show positive growth are usually led by people who are constantly re-evaluating and transforming their ideas. They also ask for, and act on, feedback from the market and build on their capabilities to fulfil market needs. 

 

To read Kevin Mackenzie’s full article, please click here.

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