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Having a Plan for Growth in this day and age is no longer optional, but is a necessity. Business plans are not enough.
In our ever-changing world, if you are not growing you are being overtaken.
Its a dog eat dog world out there, the rabbit that stands still is the rabbit that is eaten.
A plan for growth ie Growth Plan can help keep the wolves off your back.
So, what is the recipe for a Growth Plan?
Remove all sections of a business plan that don’t directly impact customers, shrink your Strategic Plan to 12 months, add rapid execution and you get a Growth Plan”
Growth Plans are nimble and typically targeted for 1-2 years or less. It must be agile and able to adapt as market conditions change. The tactics in a Growth Plan uses short sprints in 90-day cycles. This ensures execution is rapid and any lessons learnt is fed-back to fine-tune the Growth Plan for the next sprint, in near real time.
Business Plans are very useful to gain external funding from banks or investors. In contrast, a Growth Plan provides a deeper dive by exploding the “go-to-market” section that is typically seen in a Business Plan into a more granular plan on how to engage and create value for customers to move the revenue dial.
As the pace of change accelerates in society and customer buying patterns change, a Growth Plan provides a more realistic method of planning and execution than traditional Strategic Planning which typically looks at a longer 3-5 year time frame.
The essentials of a Growth Plan
A Growth Plan should only contain elements that customers can see direct relevance and value from engaging with your business. A Growth Plan has 9 steps ; it starts with business goals that point the business in the correct direction. A Growth Plan also spells out the strategies and tactics for reaching these goals.
In the absence of a Growth Plan, many businesses suffer from multiple knock-on effects that impact revenue growth.
Growth Plans are inherently strategic – it focusses only on Revenue generation. (Reference: the most fundamental equation in commerce: Profit=Revenue-Cost). It lays out the plan that relates directly to the organic growth of a business.
It enables you to connect your business goals and chosen strategies with coherent actions at the coal-face that have a direct impact on clients – to both protect existing revenue and generate new revenue.
Developing a Growth Plan should be a rewarding experience, not a daunting task that keeps getting postponed. It should enable you to clarify and prove to yourself first how you plan to generate revenue.
So how do we start the growth planning process?
The Growth Plan is a combination of strategy and specific steps to implement that strategy to help achieve your business goals. The plan makes the connections between the different functions that create value for your clients by examining:
Where are you now? Where do you want to go? How do you get there? These questions translate into a 3 pronged-examination of:
- Current State: You start the plan with a defined set of resources.
- Future State: You want to get to a point in the future (usually 1 to 2 years) at which point in time your business will have a different set of resources and capabilities.
- Bridging the Gap: Your plan shows how you will get to the desired future state.
The critical section from the output report is the action plan that you will use to:
- gain buy-in from other stakeholders such as staff and external advisers, and
- track progress and fine-tune the growth plan from your findings in execution
A well crafted Growth Plan enables you to take advantage of disruptive changes in the customer buying patterns, set meaningful priorities, and understand the need to pursue results in a systematic and methodical manner to ensure success.
The key with any growth strategy is to be deliberate. Figure out the rate-limiting step in your growth, and pour as much fuel on the fire as possible. But for this to be beneficial, you need to take the following steps:
1. Establish a value proposition.
For your business to sustain long-term growth, you must understand what sets it apart from the competition. Identify why customers come to you for a product or service. What makes you relevant, differentiated and credible? Use your answer to explain to other consumers why they should do business with you.
For example, some companies compete on “authority” — Whole Foods Market is the definitive place to buy healthy, organic foods. Others, such as Walmart, compete on price. Figure out what special benefit only you can provide, and forget everything else. If you stray from this proposition, you’ll only run the risk of devaluing your business.
2. Identify your ideal customer.
You got into business to solve a problem for a certain audience. Who is that audience? Is that audience your ideal customer? If not, who are you serving? Nail down your ideal customer, and revert back to this audience as you adjust business to stimulate growth.
3. Define your key indicators.
Changes must be measurable. If you’re unable to measure a change, you have no way of knowing whether it’s effective. Identify which key indicators affect the growth of your business, then dedicate time and money to those areas. Also, A/B test properly — making changes over time and comparing historical and current results isn’t valid.
4. Verify your revenue streams.
What are your current revenue streams? What revenue streams could you add to make your business more profitable? Once you identify the potential for new revenue streams, ask yourself if they’re sustainable in the long run. Some great ideas or cool products don’t necessarily have revenue streams attached. Be careful to isolate and understand the difference.
Related: 5 Mistakes Successful Entrepreneurs Don’t Make Twice
5. Look to your competition.
No matter your industry, your competition is likely excelling at something that your company is struggling with. Look toward similar businesses that are growing in new, unique ways to inform your growth strategy. Don’t be afraid to ask for advice. Ask yourself why your competitors have made alternate choices. Are they wrong? Or are your businesses positioned differently? The assumption that you’re smarter is rarely correct.
6. Focus on your strengths.
Sometimes, focusing on your strengths — rather than trying to improve your weaknesses — can help you establish growth strategies. Reorient the playing field to suit your strengths, and build upon them to grow your business.
7. Invest in talent.
Your employees have direct contact with your customers, so you need to hire people who are motivated and inspired by your company’s value proposition. Be cheap with office furniture, marketing budgets and holiday parties. Hire few employees, but pay them a ton. The best ones will usually stick around if you need to cut back their compensation during a slow period.
Developing a growth strategy isn’t a one-size-fits-all process. In fact, due to changing market conditions, making strategic decisions based on someone else’s successes would be foolish. That’s not to say that you can’t learn from another company, but blindly implementing a cookie-cutter plan won’t create sustainable growth.
You need to adapt your plan to smooth out your business’s inefficiencies, refine its strengths and better suit your customers — who could be completely different than those from a vague, one-size-fits-all strategy.
Your company’s data should lend itself to all your strategic decisions. Specifically, you can use the data from your key indicators and revenue streams to create a personalized growth plan. That way, you’ll better understand your business and your customers’ nuances, which will naturally lead to growth.
A one-size-fits-all strategy implies vague indicators. But a specific plan is a successful plan. When you tailor your growth strategy to your business and customers, you’ll keep your customers happy and fulfill their wants and needs, which will keep them coming back.
Step 1: Start by identifying your high-level business goals
As human beings, we have a tendency to start all journeys at the beginning. And this makes sense of course. After all, if the stories we read started at the end, wouldn’t that defeat the purpose of going through the journey?
Imagine if you were to start reading the Harry Potter series, and J.K. Rowling started the story by saying:
“Hey guys, just so you know, Harry wins and Voldemort is defeated in the end.”
Or if the Star Wars series started with Luke finding out that Darth Vader was his father? Wouldn’t it kind of kill the mood and the anticipation that comes with reading or hearing a story?
Well, the journey to product growth and business growth functions a little bit differently. In fact, it’s almost more helpful to start at the end and work backward, especially when your planning growth.
It makes sense too, right?
If you could know for sure how much revenue your company would make in the long-run before you even started your venture, would that not be helpful in figuring out the best growth strategy to get there?
Starting at the end of your growth strategy:
It’s always helpful to start out with a very high-level and ambitious goal. Many successful and fast-growing companies do this, and all of them have different terms to refer to these high-level goals.
Shopify calls this the BHAG, which stands for big, hairy, audacious goals. This business goal is usually meant to seem a little bit crazy.
Brian Balfour takes a more practical approach and refers to setting high-level goals as using the Top-Down Approach to inform your growth models.
And of course, at Venngage we simply call these our “high-level” or “long-term” goals. But the point is, you need to start out by mapping out a long-term goal, like your 10-year goal.
Where do you see yourself and your company by that time? How much should you grow your business? How much revenue do you expect your company to generate? How many employees do you see yourself having?
Take a look at the example in this growth strategy template:
These are the High-Level Growth Goals for a hypothetical company called StartUp Masters. Their mission (“To provide startups with an affordable means of managing projects in order to achieve rapid growth”) is clearly stated, and their goals are broken down in order to depict where they envision themselves to be In 10 years, 5 years, 3 years and finally 1 year.
At 10 years old, the company expects to be making 100 million in revenue and they expect to achieve this with 120 employees. They’ve also indicated the number of daily active users required to get there.
On top of that, they’ve listed out some steps required in order to achieve those goals. As you glance further down the funnel, you can see that this is, in fact, a pretty audacious business goal considering where the company is probably starting out from.
By working backward, it becomes easier to make somewhat realistic goals of where the company would need to be in 5 years, 3 years and 1 year in order to hit that 10-year goal.
Start breaking down your own high-level goals with the Growth Goals template.
OK great, so you’ve got your high-level goals set out, now you can wipe your hands clean and be done with your growth strategy, right?
This is only one small part of the process. The next step is to figure out how you can hit your 1-year goal, and that means understanding which metrics are most important to improve in order to make a big impact on growth.
Step 2: Know which inputs and outputs impact your goals
Andy Grove’s book High Output Management is one of the most useful resources on building a high-functioning and, of course, high output company.
In this book, he uses the analogy of a breakfast factory to help explain the importance of all the little actions (or inputs) that have an impact on the successful operation and growth of the factory (its output).
What this means is that for every goal you set, there are key metrics and results which will help you identify whether or not you will, in fact, achieve that goal. And of course, there are specific growth strategies that you can follow to help you move the needle on those key metrics.
Identifying your North Star Metric
One of the first metrics you should identify is your North Star Metric. This metric is often described as the one number that best represents the core value that your product delivers to your customers.
For instance, if we take Airbnb as an example, their North Star Metric is the number of nights booked. Why?
Because it’s a clear indication of their product’s value.
If more nights are being booked, and that number is consistently increasing, it means that more customers are having a positive experience with Airbnb and are therefore returning to the platform to book their accommodation.
At Venngage, our North Star Metric is the number of infographics completed. Because if people are completing more and more infographics that they are proud of, it’s a clear indication that they are finding value from the tool.
This number should also have a direct correlation with your company’s revenue goals and retention goals. The more value people are finding from your product, the more likely they are to stay and continue paying for your product.
The next step is identifying what your current baseline is for your North Star Metric. Let’s take a look at the growth strategy template below for our hypothetical company, StartUp Masters.
In the previous template that broke down their high-level goals, they indicated that one of the steps to achieving their 1st-year goal was to increase the retention rate to 30% at 12 months.
If you take a look at the end of the above template, you can see that the baseline of completed projects is indicated under the Retention OKR.
As you can see, they have identified that users have completed 90,000 projects successfully, and they currently have 45,000 Daily Active Users.
Now, in order to hit their revenue and acquisition goals, the company needs to get to 70,000 Daily Active Users. But in order to hit their retention goal of 30%, each of those users needs to complete at least 3 projects successfully which they have calculated as a leading indicator of better retention.
When creating your growth strategy, you need to figure out the overall baselines for your North Star Metric, and how that number will need to change in order to impact your various OKRs.
Setting your OKRs and Inputs
If you weren’t aware of what an OKR is, it stands for Objective Key Results. They refer to specific metrics that you can track which will, in turn, influence your high-level goals.
In most software startups, many founders follow the AARRR framework for setting and tracking OKRs. This stands for Acquisition, Activation, Retention, Revenue, and Referral.
Each of these metrics is important for understanding the behaviors of your customers and of course, the growth potential of your business.
Sometimes, however, it can be overwhelming to influence every single one of these metrics, so in this particular growth strategy template, which helps to break down goals, StartUp Masters is focusing on influencing Acquisition, Conversions (Revenue) and Retention OKRs.
Take a look at the Acquisition OKRs they identified while growth planning:
The main metrics that influence acquisition for StartUp Masters is their Organic Traffic goals and their Paid Traffic goals.
They will need to scale their organic traffic by 130,000 unique visits a month, and their paid traffic by 70,000 unique visits a month.
However, if you look at the inputs that impact those specific OKRs, there are multiple pages that drive organic traffic, so they’ve outlined the required traffic to these various sections of their site.
For the sake of simplicity, the OKRs mentioned here only talk about the traffic goals and not on the burn rate of your marketing budget. However, in actual practice, you may also be concerned about your customer acquisition costs.
Typically, paid acquisition channels like Facebook Ads and Adwords have a higher CAC than organic channels like SEO or content marketing. A long term growth plan might hence also include targets to bring your average acquisition costs down.
By continuing to break down their goals into smaller and more specific inputs, it becomes easier to envision the path towards achieving those high-level goals within the growth plan.
When you are setting your own OKRs, you also need to know which metrics you can manipulate at a smaller scale that will have greater leverage. And as you continue to figure out which inputs will impact your OKRs, you can start thinking of experiments that will, in turn, influence your inputs.
Help your team to clearly understand which inputs impact your main OKRs.
Step 3: Brainstorm experiments to run that directly affect your identified inputs
Coming up with valuable experiments to run is not always as easy as it may seem. In fact, one issue that many startups face when it comes to implementing new product features, or marketing strategies, is waterfalling.
What’s waterfalling, you ask?
Simply stated, waterfalling is what happens when a team continues to add requirements to a project, to the point where the task becomes so large that the time required to implement it keeps increasing. Eventually, what was supposed to be implemented within a two-week sprint, ends up taking months to push out.
In an effort to avoid falling victim to the waterfall taking over your growth strategy , it’s better to operate on a one or two-week sprint cadence.
This can be achieved by, you guessed it–breaking down these big projects into more bite-sized experiments, or MVTs.
An MVT is a Minimum Viable Test, and its purpose is primarily to derive insights and validate whether or not it’s even worth pursuing the larger-scale project. By running more MVTs, you gain more learnings which can help inform which steps to take next.
Start by deciding which OKR you are trying to impact. As you can see in the growth strategy template below, the OKR that StartUp Masters is trying to impact is their retention metric. The goal is to push more users to complete one additional project in the span of three weeks.
Then, the suggested experiment is to create a pop-up modal within the project dashboard which will push users to begin a new project upon hitting the 80% completion mark.
They’ve even hypothesized the results that this new implementation will reap. If you take a look at the next step, they’ve outlined the effort required by each team. This is usually a pretty clear indicator of whether or not your experiment is veering in the direction of a waterfall.
Your goal when planning out MVTs is to run experiments which require low effort, but have a high output. These are considered to be “slam-dunks” because you can get big results in less time and with less work required.
Naturally, not every experiment will be a “slam-dunk” but as a general rule of thumb, you want to avoid anything that could be considered high effort and low output, which risk becoming “turtles”.
So here’s where the MVT breakdown board comes in handy when planning your growth strategy. Just walk through this process to get an idea of whether or not your suggested experiment can and should be broken down even more.
Using the example above, let’s run through the flowchart.
- Can this experiment be implemented in the span of 1 week?
Well, considering that the Marketing and Engineering effort required is medium, and the Design effort is high, chances are that it will take at least a few weeks to run the test, so the answer is no.
- Has this implementation already been validated and proven to have a direct and positive impact on the OKR via a previous experiment?
Since this is a first test that StartUp Masters is running in order to try and get more people to create a new project, chances are it hasn’t been proven in anyway just yet. So the answer is also no.
- Can this implementation be broken down and tested without the assistance of engineering?
In this case, the answer is yes because there are other means for StartUp Masters to get the insights they require in order to validate their idea. At this point, they would need to list out possible ways to run the test without the support of engineering.
This might mean something as simple as setting up an automated email to a segment of users that is triggered at the 80% completion mark, asking them to start on the next project.
- Will this smaller test still provide useful insights without requiring substantial effort from multiple teams?
Sending an email is a relatively low effort task on the Marketing side which requires little to no support from Design or Engineering, and which will still provide enough information to validate whether the full feature should be implemented. So the answer is a resounding yes.
As a result, by running their suggested experiment through the MVT Breakdown Board, StartUp Masters is able to avoid a waterfall project and gain useful learnings in a shorter period of time.
Are your experiments at risk of becoming waterfalls? Use this chart to help break your projects down into smaller MVTs.
Step 4: Validate your experiments with a checklist
Sometimes, breaking down an experiment to an MVT is still not enough to validate whether that test is worth including in your growth strategies.
You need to know if it will have a positive impact on your users and their needs as well. Afterall, your job is still to provide a great and valuable experience for your customers.
This is where the Experiment Validation Checklist comes in handy.
As you can see, StartUp Masters follows the “Jobs to Be Done” framework, which focuses on the goals a potential user has, rather than solely focusing on who they are as a person (which is more dependent on marketing to personas).
Here we can see the various “Jobs to Be Done” listed out. Moreover, they are also considering personas as an important factor in how they plan out their experiments.
Of course, they include the probability of success as a factor, the effort required per team and the OKR that is impacted from the experiment.
By getting everyone on your team to use this growth strategy checklist when deciding which experiments to go after, it becomes easier at a first glance to know if all the areas of importance are being considered.
Need help validating your experiments to identify their value?
Step 5: Foster accountability in your team
Lastly, it’s important that everyone on your team understands the work that they are doing, and the value they bring to the company with the growth projects they are running.
By getting specific individuals on your team to share the tests they released, as well as what they learned in a given week, you are encouraging them to consistently produce results.
In your weekly meetings, show the rest of the company what was launched, and what results were achieved. Get each person to speak to their own growth experiments so that they can feel accountable for the work they do.
If there are underperformers that have a tendency to work at a slower pace or reap less valuable insights, this growth strategy template will push them to increase their output.
At any rate, the rest of the company will see who the A-players are, and who is falling short, which is often a wake-up call for the latter.
Start tracking which experiments your team members are working on, and monitoring what results they are getting.
There is no silver bullet or quick “hack” that will lead to explosive growth.
In fact, growth is a long process and requires a strong focus and understanding of the data and metrics that influence the various moving parts of an organization. That is why you need a well thought out growth strategy to really succeed.