𦠠 Growth as Survival
âď¸ Â Â Sunset Investments
đ Â Â Invite Your Team
đŚÂ Growth as Survival
When a great white shark stops swimming, two critical things happen: it starts to sink, and oxygen is depleted. For the species, itâs a matter of swim or die.
For a business, itâs very much the same: grow to survive.
The necessity to grow has increased since 2021. It now feels like you have to grow by 20% to earn 5%.
For almost 40 years, businesses operated in a stable, low-inflation market. Between 2000 and 2020, the average inflation rate was 2.06%. In June 2022, US inflation spiked to 9.1%, with an average of 5.2% over the past 5 years.
When we compare business strategies prior to 2020, low, stable growth was fine. If your business was profitable, it could carry on for decades.
Since 2020, itâs the opposite. Inflation coupled with uncertainty has translated into rising costs, shrinking margins, and unpredictable sales. Low growth is like a great white shark that stops swimming.
Growth is more than an aspiration, itâs a necessity:
- 0% sinking
- 5% breakeven
- 10% healthy
- 15% leading
Coming from 0-5%, a 10-15% annual growth rate may seem unachievable, but itâs not. It is an aggressive but sustainable growth rate for most mid-market companies. It can be achieved organically through disciplined execution, cost containment, and staying ahead of your market.
If this strikes a chord and youâd like to learn how, letâs schedule a call.
âď¸Â Sunset Investments
Healthy growth requires letting go of investments that are no longer serving your company.
Since 2006, Google has sunset over 150 products. This is unusual. Most companies do the opposite. They hold onto people, products, and investments for way too long:
- The CEOâs pet project.
- A product or service that was once the companyâs core offering.
- A program thatâs had too much invested in it to walk away.
- Obsolete processes and infrastructure, but itâs what we know.
In good times, you can tolerate the drag on the business. But when you need to grow, lagging investments consume profits and resources.
A growth strategy requires recognizing investments to sunset. This can get emotional, but imagine what private equity would do if it bought your business. Without emotion and bias, they would assess what it takes to drive growth and cut what doesnât serve it.
You donât have to wait for someone else to make these hard choices. Sunset the parts of your business that wonât get it to the next level.
đ One Stat to Watch
61%
SpaceX IPOâd for $75 billion with a vision of building a lunar economy and cities on Mars. But the business is far more practical. Starlink accounts for 61% of SpaceXâs revenue and 100% of its profit.
đ Invite Your Team
Underpinning every growth strategy is change management. Itâs the old adage: What got you here wonât get you there. Which means you need to change to grow.
One of the strengths of mid-market companies is they are incredibly resilient, but with that, they can be resistant to change. Itâs not that they donât like change or want change. Rather, the organization is programmed to maintain a state of equilibrium, like homeostasis.
âHomeostasis is a very good thing, unless you want to make a change.
When you define a growth strategy, you are stating how, where, and why you want to change the business. But if your team doesnât understand and buy into the change, the strategy is dead on arrival.
Invite your team on the growth journey. As a leader, present your strategy:
- This is what we know, and this is what we donât know.
- These are our decisions and how we came to them.
- This is where we are going and why.
Then ask, will you come on the next phase of the journey? With your teamâs commitment and focus, you can change to grow.
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