The Business Growth Matrix
Every business owner understands that running a company is a complex
affair. Popular media would suggest that the majority of company owners
and directors are living millionaire lifestyles. The reality could not
be more different.
Research suggests that 96 percent of new businesses fail within ten
years. Of the remaining 4 percent, the majority of those struggle to
survive and make a decent profit. If you look at the commercial printing
industry it is estimated that half of the businesses that existed in
1992 are now out of business.
Those statistics would cause you to wonder why somebody would run a
business in the first place. I read somewhere recently that
entrepreneurs work 80 hours a week for themselves to avoid working 40
hours a week for somebody else.
Research suggests that 96 percent of new businesses fail within ten years, which is why making a plan is essential
I spend my life working with people like this, looking for ways to
simplify the complexity of their companies. I have learnt that it can be
extremely helpful to have a structure through which to look at your
business.
I have learnt that it can be extremely helpful to have a structure through which to look at your business”
When you can look at your business through a particular framework, it is
significantly easier to figure out what is not working and what to do
next.
In this article, I am going to introduce you to the Business Growth
Matrix. This Matrix is the same system I use when working with my
clients to help them create scalable, predictable, and profitable
growth.
Customer development
If you examine most business failures you discover that the root problem had to do with customer development.
I explain customer development as the ability to find, win, keep, and
grow ideal customers at premium pricing. When you know how to do this
effectively, everything else in your business becomes so much easier.
Unfortunately, customer development is not easy to master, which is why
so few companies are good at it. It is not simply a matter of hiring a
salesperson, setting up a good website or social media profile, joining a
local networking group, or any of the other typical tactics different
companies use. If only it were as simple as that.
However, if you structure your customer development activities using the
Business Growth Matrix, you will significantly increase your odds of
success.
If you structure your customer development activities
using the Business Growth Matrix, you will significantly increase your
odds of success
Metaphorically, you could think of the Business Growth Matrix the way
you think of the human body. The five customer development themes would
represent different physical parts of the body, such as head, chest,
arms, hips, and legs. These are the obvious areas of the body that one
sees on initial observation.
The Core 4S Model would represent systems which you do not readily see
but that run across all body parts. Examples would be bone structure,
blood vessels, muscles, and nervous system. These core systems are not
initially visible, however, they are critical for the effective
functioning of the human body.
Let us start by examining the five customer development themes, which
are the more obvious customer development issues every owner has to deal
with.
Development themes
These are the five themes every business must master if they want to create scalable, predictable, and profitable growth.
1) New customers: how to find and win more new ideal clients
Everyone knows that sales is the engine that the drives a business
forward. New customers are the lifeblood of every business. This theme
is where you answer questions such as:
- How do we generate new business sales leads for our company?
-
Do we have at least four to five proven lead generation systems so
that we are not overly dependent on a single source of new customers?
- When we generate a lead, do we have a commonly understood sales process which is based upon best practice?
-
Are we using a proven sales conversion process based on a consultative selling model?
2) Existing customers: how to keep and grow your current clients
There is a significant difference between account management and account
development. Account management is about reactively responding to
customer queries. Account development is about proactively finding
opportunities to grow and develop existing accounts. This theme is where
you answer questions such as:
- Have you segmented your existing customer database and created service standards for each segment?
-
Are you creating targeted lists of existing accounts that have future growth opportunities?
-
Are your account managers and estimators trained to cross and upsell?
-
Are you producing written account plans for your growth accounts?
3) Profit margins: how to boost your profit margins and still sell effectively
An extra 5 percent gross margin can be the difference between a
profitable business and a company that is about to go into
administration. Most people do not naturally understand the profit
drivers in the businesses within which they work.
An extra 5 percent gross margin can be the difference between a
profitable business and a company that is about to go into
administration”
As a business owner, it is your job to ensure that they do understand those profit drivers. Topics to consider would include:
-
How do the four profit drivers work in your business?
-
The impact different levels of discounting have on your net profits.
- How to protect your margins on existing accounts.
-
Learn how to sell value and avoid the commoditisation trap.
4) Sales force management: how to find, hire, train, and retain salespeople, account managers, and customer
service specialists
Sales force management is not just for companies who have a new business
sales team. You need to understand sales force management even if you
only have one customer service rep. Salesforce management is relevant to
companies that have a customer service team, account managers, or new
business salespeople. Issues you have to consider include:
-
How to align your compensation system to the priorities of your business.
-
How to find, hire, train, and retain a team of A-players.
-
How to manage your new business sales pipeline, even if you are the only salesperson.
-
How to motivate your sales team to be more active and proactively sell.
5) Strategic execution: how to align your team behind your most important goals so you get more done faster.
Strategic execution is a matter of combining two important factors in
your business. Boosting the productivity of everybody in your business
through more effective time management and personal organisation. Then,
you can combine that increased productivity with clarity around your top
three company priorities. Topics to think about within this theme would
include:
-
Gaining clarity around your top three company priorities for three years, one year, and 90 days.
-
Remaining focused on and speeding up the rate at which you execute on a small number of important company goals.
-
Improving your organisation, self-management, and time management.
-
Implementing a simple project management system for tracking and driving progress on your most important company objectives.
Core 4S model
The 4S’s run through the core of the five customer development themes.
Referring back to the human body metaphor earlier in this article, these
are the core functions which are not readily visible. However, when
these core functions malfunction, the human body (i.e. your business)
will start to break down.
1) Strategy: winning move
Strategy is where you make major decisions such as defining your ideal
client market sector, clarifying your value proposition (a.k.a. your
difference maker) for your ideal client, defining your product profit
pyramid, and creating an investment strategy based on the dynamics of
your target market.
2) Structure: ideal team design
Structure is where you define who needs to be on your team so you can
achieve your business growth goals. What is the ideal performance pay
structure? Do you have the right people sitting in the right seats in
your bus i.e. are you playing to people’s strengths? Are you maximising
the productivity pyramid i.e. removing low-paid tasks from expensive
people?
3) Systems: repeatable best practice
Systems is not simply a matter of setting up standard operating
procedures. It is more about best practice and optimisation of your top
seven business/profit drivers. Are your most important systems i.e.
customer acquisition, fully optimised and systematised? Do your team
members have the required tools, scripts, and examples that they can
follow? Are you continually training your team to run your optimised
systems so you maximise results?
4) Skills: competent team members
The simplest way to think about skills training is to consider it within
the context of your systems. Your ultimate goal will be to have highly
skilled team members running fully optimised business systems. It is
also important to remember that continual development is critical if you
want to attract and retain a team of A-players. Everyone on your team
should be on a training and personal development plan.
Everyone on your team should be on a training and personal development plan”
When you are working with a skilled team they will have the ability to optimise and run your systems for you.
What to do next
Depending on your situation and experience there are two action steps you could take next.
Option 1:
Grab a blank sheet of paper and create nine boxes to represent the
Business Growth Matrix. Brainstorm one action point you could take to
improve your results in each box. Next, select the item that is quickest
and easiest to implement and start working on that now.
Option 2:
If you would like to take a shortcut you can request a FREE Business
Growth Matrix strategy session with me. I am offering a number of free
sessions to qualifying companies. You must apply within 28 days of the
magazine publishing date. After the strategy session, you will know how
to apply the Business Growth Matrix to help your company create
predictable, scalable, and profitable growth.
To find out more, send an e-mail to Nick@theprintcoach.com and put the words ‘Business Growth Matrix’ in the subject line.
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