Help Your Business Soar
Written by Administrator
Defying business gravity that holds your company back starts with discovery diagnostics.By Margaret Reynolds
To achieve escape velocity (or accelerated growth) for your business, it is imperative to start with an understanding of the environment in which you will operate and the conditions you will likely face. Your business is not an isolated organization; it functions within an economy, industry and market that influence the opportunities you have and the challenges you encounter.
To develop an effective growth plan, you must understand these forces as they are today and as they are likely to be in the future. It requires a macro or "big picture" look at the market you serve, as well as a closer inspection of the micro factors unique to your business or niche.
Discovery is a process that transforms data into information and forms the foundation of decision making on the best growth alternative for your company. There are three reasons why discovery is critical to your growth planning.
1. Accuracy
Using real data means you are able to make a well-informed decision. You take out guesswork as much as you possibly can. There is always room for experience to serve as a guide and even for anecdotal information about your business and the market you serve. But it is wise to lace decision-making with a heavy dose of reality. You may be surprised how often perceptions and facts don't align.
2. Objectivity
Using facts also removes some of the emotion of decision-making. Rather than have a lively debate about what is or is not true, data can make the picture much clearer in terms of defining historical trends, identifying issues or topics that are most important and focusing the team where they can make the most difference. This means your team can all start on the same page relative to what you need to talk about and what you should consider in your decision-making process.
3. Confidence
It increases your confidence in the plans you make so that you are more inclined to stay the course. You know that the data you based your decisions on was not your best guess, but rather real information gathered to give you insight into your business and its operations. When the path becomes difficult'and it will from time to time'you are more likely to be committed to the journey because you carefully researched the market and the business, and you understand what is needed.
The critical steps in the discovery phase include the following:
- Diagnostics – Define the gravitational factors (or what is holding you back), as well as the space or the environment in which you compete and how it might change in the future.
- Determine Options – After understanding what the market looks like and where it is going, you are ready to determine what the best opportunities are.
- Decide Opportunities – After investigating the opportunities available to you and applying standard business evaluation, use objective-based decision making to prioritize your opportunities.
Market Assessment
Identify the current market in which you are operating and determine key trends or changes you anticipate. Some questions to ask include:
- How big is the industry in which you compete and how fast is it growing?
- What changes in the industry will be most relevant to you and your company?
- What companies are gaining or losing share and why?
It is important to understand who your competitors are and what they offer to customers. Customers have a choice in their purchase decisions, and not all customers will choose you. In fact, you are not trying to appeal to every customer, as that means you are not distinctive in your offer. Different customers seek different benefits. But you do want to understand the other choices customers have in the market. Develop a "map" of the competitive set to better understand what choices customers have and where your current competitive advantage lies.
Business Assessment
There are three key areas involved in business assessment:
- An understanding of organization goal achievement – Review company goals for the past few years and assess whether they were met or exceeded, as well as the reasons why. Was a certain type of goal met and others were consistently not met? What gets in the way of goal accomplishment? Are these factors within your control?
- An assessment of internal capabilities – Understanding relative strengths and weaknesses is important in defining the growth opportunities that are the best fit for your company. What are your biggest strengths and greatest competencies? What do you do better than your competitors? What do they do better than you?
- An evaluation of financial performance and trends – How well you are doing against plan, what costs are rising the fastest, which customers are contributing the most to margin, which products contribute the most to revenue and new customer acquisition are all important things to understand in the diagnostic phase. Developing a growth plan that doesn't consider your financial model and how you make money is not likely to maximize your success.
Obviously, you will never know everything you would like to about your markets, your competitors or the future. None of us has a crystal ball. It is also true that the future is not always an extrapolation of the past. Your job in completing the diagnostics is to look for a game-changing impact. You want answers to some key questions:
- Where are you spending too much money and what can you do about it?
- Where is the market heading and how might that affect your business?
- Where is the market underserved and how can you capitalize on that?
- What are the potential challenges to growth and how can you avoid them?
Margaret Reynolds is managing principal of Reynolds Consulting, LLC, which has a number of tools and resources to help clients complete their diagnostics. (816) 350-7680//
