If I were to ask you, “What are the five most important things your business needs to accomplish over the next 12-months to drive significant growth gains for your business?” what would you say in response? Could you enumerate your top five without having to pause to think? And, more importantly, could your employees come up with that same list, just as quickly? If not, that’s a problem.
One of my favorite quotes along this line comes from Jeffery Immelt (of GE fame)
Which begs the question, how do you determine what are the top three to five issues that your business or organization should be focused on?
In my planning work with both businesses and organizations, I’ve come to the conclusion that growth plans and strategic plans need to encompass two different kinds of top priority lists. I call them, “Growth Accelerators” and “Constraint Eliminators,” (which you can learn all about, and so much more, in my course entitled, “Double It.”).
I. Growth Accelerators Defined
Simply put, a growth accelerator is an initiative that you (or you and your team) believe can deliver a significant growth gain for your business. This means that for most businesses a growth accelerator has a REVENUE number attached to it. In other words, while improving customer service may be a critical thing for a business to work on, it’s not a growth accelerator unless you can attach a significant revenue number to it.
In addition, a growth accelerator should generate at least a 5% increase over last year’s revenue numbers (and better if it’s 10% or more). Why? Because, if you want to accelerate your growth and you have as your top five initiatives actions and ideas that only offer incremental growth of maybe 1-2%, you are planning for only a 5-8% growth gain for the year.
However, if you pick five ideas that you believe can deliver at least five percent, your floor is a 25% growth gain (with an upside of 50-100% growth). Unfortunately, most small businesses rarely attach a revenue number to their growth ideas, and that can lead to poor decision-making.
In fact, on one of my first consulting engagements after leaving pastoral ministry, I was working with the Maryland Soccerplex (which has 24 soccer fields) on their strategic plan. I was talking with the Executive Director (who was and is a great friend–and who has done an exceptional job leading the Soccerplex since its inception) about a variety of different ideas for how we could grow their revenue (they were plateaued at $3M at the time).
I then went back through the list and asked her to give me her gut reaction to how much revenue each idea could possibly generate. One of those ideas was to offer more birthday parties for kids (like a lot of sports complexes, the Soccerplex, has a field house that could offer indoor parties for kids where the kids could have their birthday cake and play some kind of sport activity).
She thought about it for a moment and said, “Maybe an additional ten grand.” To which I said, “Then let’s just say, ‘Birthday parties’ are not our future.” In other words, $10K on a $3M budget doesn’t move the needle. Five percent of $3M is $150,000. So, we only focused on ideas that could generate an additional $150K or more.
And since that time, whenever I’m working with my consulting or coaching clients, and they suggest an idea that I’m pretty sure won’t move the needle, I’ll ask, “Is that a birthday party?”
Growth accelerators aren’t birthday parties. Growth accelerators are ideas that move the needle. They’re significant right turns that can drive an extra 5%, 10%, 15%, 30%, 50+% growth in REVENUE.
Note: Some organizations, like churches, have different metrics. In the case of a church, I’d define their growth accelerators as the top five (max. seven) ideas that can drive significant membership or attendance growth. In other words, what ideas could generate at least a 5% increase in attendance (per idea)? So, a church of 1,000, with five ideas that could generate at least a five percent increase per idea, would grow from 1,000 to at least 1,250 people per week in attendance.
But, and this is key, regardless of whether you’re measuring results in dollars or in bodies, attaching a number to each growth accelerator is absolutely essential. This is where most planning efforts fail. They come up with ideas that they HOPE will grow their business or organization, but they never actually check to see if those ideas, when added up, could actually deliver the results they want.
II. Growth Accelerators Illustrated
Going back to the Soccerplex, at the time, when I asked the Executive Director about the business model of the Soccerplex, she said they were in the field rental business. I also asked her some questions about the finances related to tournaments and quickly discovered that the amount made for the group organizing a tournament was significantly greater than the amount the Soccerplex was making renting the fields for the tournament (for simplicity’s sake, let’s say the difference was around $100K per tournament).
So I asked, “What if we got out of the field rental business and got into the running tournaments business?” Now, why did I ask that question? Because, doing the math, I knew that if they took back five tournaments and ran them themselves, that was at least a half million dollar idea. And on a $3M budget, that would be a growth accelerator (i.e. not a birthday party).
Once you do the math, it makes it so much easier to see what could be a growth accelerator. If you’re running a $500K company, you’re looking for ideas that could generate at least $25K in additional NEW revenue. If you’re running a $10M business, you’re looking for ideas that can generate at least a $500K increase. If you’re running a $2M business, you’re looking for $100K ideas (or more).
So, what kinds of ideas can generate those kinds of numbers? Well, if you check out the Double It course, I walk through 32 different kinds of strategic moves that could produce those kinds of gains. To get you started, here are a few of them.
- Could you introduce a new product or service that could drive significant growth?
- Could you optimize a sub-optimized asset?
- Could you monetize some IP you possess that others would be willing for to pay to acquire?
- Could you take your current products and services to an adjacent market?
- Could you license your products/services/IP?
- Could you hire a sales force to move more of your products and services?
- Could you move to a new geographical area (for example, expand from the east coast to the west coast), etc?
All in all, whenever you’re trying to define a growth accelerator, you’re always looking for an idea that can drive at least a 5% increase in revenue growth (or whatever metric you use to evaluate growth).
So, going back to the first question, “What are the five most important things your business needs to accomplish over the next 12-months to drive significant growth gains for your business?” Whatever those ideas are, those are your growth accelerators. And they are the key to making this year your best year ever!
To your accelerated success!
P.S. And if you haven’t checked out my course entitled, “Double It: How to Create a Killer Growth Plan to Double Your Business Over the Next 6, 12 or 24 Months,” make sure you do so ASAP!
Note: next you’ll want to read my post on Constraint Eliminators.