When you run a business, it’s easy to get caught in the moment and focus only on the day in front of you. However, to be truly successful, you must look ahead and plan for growth. Many business owners create a business growth plan to map out the next one or two years and pinpoint how and when revenues will increase.
We’ll explain more about business growth plans and share strategies for writing a business growth plan that can set you on a path to success.
What is a business growth plan?
A business growth plan outlines where a company sees itself in the next one to two years. Business owners and leaders apply a growth mindset to create plans for expansion and increased revenues.
Business growth plans should be formatted quarterly. At the end of each quarter, the company can review the business goals it achieved and missed during that period. At this point, management can revise the business growth plan to reflect the current market standing.
What to include in a business growth plan
A business growth plan focuses specifically on expansion and how you’ll achieve it. Creating a useful plan takes time, but keeping your growth efforts on track can pay off substantially.
You should include the following elements in your growth plan:
- A description of expansion opportunities
- Financial goals broken down by quarter and year
- A marketing plan that details how you’ll achieve growth
- A financial plan to determine what capital is accessible during growth
- A breakdown of your company’s staffing needs and responsibilities
Your growth plan should also include an assessment of your operating systems and computer networks to determine if they can accommodate profitable growth.
How to write a business growth plan
To successfully write a business growth plan, you must do some forward-thinking and research. Here are some key steps to follow when writing your business growth plan.
1. Think ahead.
The future is always unpredictable. However, if you study your target market, your competition and your company’s past growth, you can plan for future expansion. The Small Business Administration (SBA) features a comprehensive guide to writing a business plan for growth.
2. Study other growth plans.
Before you start writing, review models from successful companies.
3. Discover opportunities for growth.
With some homework, you can determine if your expansion opportunities lie in creating new products, adding more services, targeting a new market, opening new business locations or going global, to name a few examples. Once you’ve identified your best options for growth, include them in your plan.
4. Evaluate your team.
Your plan should include an assessment of your employees and a look at staffing requirements to meet your growth objectives. By assessing your own skills and those of your employees, you can determine how much growth can be accomplished with your present team. You’ll also know when to ramp up the hiring process and what skill sets to look for in those new hires.
5. Find the capital.
Include detailed information on how you will fund expansion. Business.gov offers a guide on how to prepare funding requests and how to connect with SBA lenders.
6. Get the word out.
Growing your business requires a targeted marketing effort. Be sure to outline how you will effectively market your business to encourage growth and how your marketing efforts will evolve as you grow.
7. Ask for help.
Advice from other business owners who have enjoyed successful growth can be the ultimate tool in writing your growth plan.
8. Start writing.
Business plan software has streamlined the process of writing growth plans by providing templates you can fill in with information specific to your company and industry. Most software programs are geared toward general business plans; however, you can easily modify them to create a plan that focuses on growth.
If you don’t have business plan software, don’t worry. You can create a business growth plan using Microsoft Word, Google Docs or a similar tool. For each growth opportunity, create the following sections:
- What is the opportunity? Is your growth opportunity a new geographic expansion, a new product or a new customer segment? How do you know there’s an opportunity? Include your market research to demonstrate the idea’s viability.
- What factors make this opportunity valuable at this time? For example, your growth opportunity could utilize new technology, take advantage of a strategic partnership or capitalize on a consumer trend.
- What are the risk factors for this opportunity? Identify factors that may make this growth opportunity challenging to execute. For example, challenges may include the state of the overall economy, intense competition or supply chain distribution issues. What is your plan for dealing with these challenges?
- What is your marketing and sales plan? Identify the marketing efforts and sales processes that can help you seize this growth opportunity. Detail the marketing channel you’ll use (social media marketing, print marketing), your message and promising sales ideas. For example, you could hire sales reps for a new geographic area or set up distribution deals with relevant brick-and-mortar or online retailers.
- What are the costs involved in this growth area? For example, if you add a new product, you may need to buy new manufacturing equipment and raw materials. While marketing costs are a given, remember to include incremental sales costs like commissions. Outline any economies of scale or places where your existing operations make the new growth area less expensive than a stand-alone initiative.
- How will your income, expenses and cash flow look? Project your income and expenses, and prepare a cash flow statement for the new growth area for the next three to five years. Include a break-even analysis, a sales forecast and all projected expenses to see how much the new initiative will add to the bottom line. Include how the new growth area will positively (or negatively) impact existing sales. For example, if you sell bathing suits and you decide to grow by adding cover-ups and sunglasses, you will likely sell more bathing suits.
A cash flow statement will indicate if you must secure additional financing, and a break-even analysis will let you know when the growth opportunity will stop being a drain on the company’s financial resources and start turning a profit.
After completing this exercise for each growth opportunity:
- Create a summary that accounts for all growth areas for the period.
- Include summarized financial statements to see the entire picture and its impact on the company.
- Evaluate the financing you’ll need to implement the plan, and include various options and rates.
Why are business growth plans important?
These are some of the many reasons why business growth plans are essential:
- Market share and penetration: If your market share remains constant in a world where costs consistently increase, you’ll inevitably start recording losses instead of profits. Business growth plans help you avoid this scenario.
- Recouping early losses: Most companies lose far more than they earn in their early years. To recoup these losses, you’ll need to grow your company to a point where it can make enough revenue to pay off your debts.
- Future risk minimization: Growth plans also matter for established businesses. These companies can always stand to make their sales more efficient and become more liquid. Liquidity can come in handy if you need money to cover unexpected problems.
- Appealing to investors: For most businesses, a business growth plan’s primary purpose is to find investors. Investors want to outline your company’s plans to build sales in the coming months.
- Concrete revenue plans: Growth plans are customizable to each business and don’t have to follow a set template. However, all business growth plans must focus heavily on revenue. The plan should answer a simple question: How does your company plan to make money each quarter?
Motivate your employees by sharing your growth plan. When employees see an opportunity for increased responsibility and compensation, they’re more likely to stay with your business.
What factors impact business growth?
Consider the following crucial factors that can impact business growth:
- Leadership: To achieve your goals, you must know the ins and outs of your business processes and how external forces impact them. Without this knowledge, you can’t direct and train your team to drive your revenue, and you will experience stagnation instead of growth.
- Management: As a small business owner, you’re innately involved in management – obtaining funding, resources, and physical and digital infrastructure. Ineffective management will impact your ability to perform these duties and could hamstring your growth.
- Customer loyalty: Acquiring new customers can be five times as expensive as retaining current ones, and a 5 percent boost in customer retention can increase profits by 25 percent to 95 percent. These statistics demonstrate that customer loyalty is fundamental to business growth.
What are the four major growth strategies?
There are countless growth strategies for businesses, but only four primary types. With these growth strategies, you can determine how to build on your brand.
- Market strategy: A market strategy refers to how you plan to penetrate your target audience. This strategy isn’t intended for entering a new market or creating new products and services to boost your market share; it’s about leveraging your current offerings. For instance, can you adjust your pricing? Should you launch a new marketing campaign?
- Development strategy: This strategy means looking into ways to break your products and services into a new market. If you can’t find the growth you want in the current market, a goal could be to expand to a new market.
- Product strategy: Also known as “product development,” this strategy focuses on what new products and services you can target to your current market. How can you grow your business without entering new markets? What are your customers asking for?
- Diversification strategy: Diversification means expanding both your products and target markets. This strategy is usually best for smaller companies that have the means to be versatile with the products or services they offer and what new markets they attempt to penetrate.
Max Freedman contributed to this article.