The pressure to grow quickly is intense. You want to expand your market and build your business and with good reason. Growing your business is integral for survival in a competitive market.
However, sometimes your business is not ready to grow efficiently and you should ensure that your company has a good product-market fit. Many companies make the mistake of growing too fast or growing before they are ready. Studies show that 44% of start-ups fail within four years. Choosing the strategy that correctly corresponds with your company’s development stage, validate, accelerate, and scale stage is key to ensure that your company grows efficiently. First, it is important to have an understanding of the three stages of growth.
Stage 1: Validate
Companies in the validate stage have a great solution to offer but have a limited amount of customers. The start-up B2B companies in this group aim to increase their sales by “creating a gateway to market products or services online.” These companies are looking to increase their customer base and establish themselves within the market. Companies in this stage hope to establish revenue targets that are based on their customer profile and target market size. They also want to ensure they have a compelling value proposition that resonates with their audience.
Stage 2: Accelerate
Businesses in the accelerate stage have a validated value proposition, a growing number of (self-acquired) customers, and want to accelerate their customer growth and expand their customer base. Though they possess more customers than companies at the validate stage, they are looking to expand and compete on a larger scale. Their goals include discovering and maintaining the best performing marketing channels, the optimization for conversation ROI, and being able to predict their month by month revenue
Stage 3: Scale-up
B2B companies in the scale-up stage have both a product-market fit and a growing customer base. These businesses want to scale-up their proven model of customer growth and compete with enterprise markets. By knowing how to create a customer pipeline in a repeating manner, they replicate their model to new goals, new industry verticals, or new product categories. They’re building the company on a large scale to the enterprise level.
It is important to understand which stage your company belongs to before you begin the growth process. However, it can be hard to resist the urge to skip one of the growth steps and jump forward. Timing your growth is key and waiting for the perfect time to fully grow your business can be difficult. To ensure you maintain successful growth, you need to ensure that you have a good product-market fit and that your product offers a viable solution to a market need.
Determining if your service is a good product-market fit can help determine if you are ready to grow and what stage your company falls into. Father of the growth hacking movement, Sean Ellis states that “if you find over 40% of your users say they would be “very disappointed” if your product was no longer available then there is a great chance that ‘you can build scalable, customer acquisition growth’.
Furthermore, to ensure that your B2B has the scalability to combat disproportionate growth, you should ensure that you have a strong product, an appropriate go-to-market strategy, and a strong team to implement the strategy. Overall, timing is key as we examine the top reasons why waiting is hard and how you can grow successfully.
Waiting is hard when you want your B2B business to be competitive
There is an underlying worry that the more time you spend growing slowly, the more time your global competitors have to attract your potential clients. This creates stress from the idea that if you are not growing in your business then your competitors are. Thus, you are losing business. So it can be tempting, if you are in stage one of the start-up scale, to quickly skip stage two and attempt to replicate your current business model before it is ready.
You can be competitive without skipping steps
It is important to be sure to compare yourself to other B2B direct competitors that are in a similar stage as yours.
This is all part of implementing a competitive analysis of companies that are comparable to your business. This can be done through a simple web search. A web search is the first step customers usually take when searching for a B2B business, so understanding search results is the first part of identifying your competition.
Analyze how big your competition is, their location, their target audience, how long they have been around as well as any other specifics that relate to your business. Much of this information can be found on their company’s website. You can even go the extra mile and view your competitor’s analytics Semrush, Screaming Frog, or SpyFu, as well as other sites that specialize in providing insights on your competition. You can spot opportunities for growth by diving into your competition’s marketing and sales tactics. By having an in-depth understanding of the market, you can locate market gaps and opportunities for growth. It is good to keep an eye on the competition to ensure that your growth is keeping up to the market, but make sure that the competition you compare yourself to is similar enough to your business that it is relevant. Otherwise, the temptation to scale up too fast will cause instability for your operation.
Waiting is hard when growth can bring about profit
If you think that it is common sense that if you have more customers, you have more profit, then think again! You always want to attract more customers. This is true. But with increased customers comes increased costs.
For example, you bring on many new clients at the same time and need to provide adequate attention to each of the clients at once. This may come in the form of expanding your office space, hiring new team members, or investing in new software to account for the client increase.
You can be profitable when you ensure to account for growing costs
Increased customers bring increased revenue but can sometimes also bring about increased expenses.
With limited financial resources, the company is hungry for new clients and sometimes the acceleration timeline may be short. As you take on new clients you may have to monitor how fast you bring them on board to ensure that your pricing strategy is accounting for these increased costs while at the same time, ensuring continued growth. It can take time to hire, find new facilities, etc. and so this must be taken into account when you set out to bring more clients on board. You have to ensure that you are not spending more money than you are making by bringing on a new client by creating a budget. If you are not sure what the most effective use of money is, create a test budget to validate growth strategies and then allocate the budget to best-performing channels.
Waiting is hard when growth can bring about stability
We all want financial security and the ability to continue to provide high-quality service. With a constant and consistent income, you are right to expect stability. Whether it is financial stability, staff retention, or just getting systems and processes into a basic routine, stability is a big reason to strive for growth so that you get to a level where your processes and income stream are stable.
However, you have to ensure that as you gain more customers, you can continue to provide them the quality that you currently provide. For example, if your company offers social media community management and content moderation and the amount of platforms you monitor grows, you will need to scale up your business to account for this. You may have to hire more moderators to keep up with the same response speed that you currently offer. Otherwise, if the time it takes to respond slows down, you risk losing the customers you just acquired.
You can obtain stability as long as you maintain your quality during the growth process
You have to maintain quality.
This is especially true if what sets you apart from your competition is the level of quality you offer. For instance, if it takes your company a week to respond to something that before expansion would have only taken a day, then you risk losing any leg-way you have gained because the quality of service has dropped.
With growth comes stability, but only if that growth is sustainable and the essence of what made your business great is maintained. If you gained more customers and your company is still able to maintain its current level of operations, or better yet, offer more options and value to your customers, then having more clients brings about the stability of finances and processes.
But if you increase the number of clients you bring on and your quality or amount of services drop because of this expansion, then it may be a better idea to wait and get a sustainable growth plan in place before initiating that level of growth.
No matter what stage your business is in, the process of growing in itself is not necessarily stable and you will have to hire more and adapt as you get larger. This means you may have to adapt rapidly as you grow. According to Forbes, though most people believe that growth will bring about stability, often it brings about the opposite before stability finally sits in.
It can be hard to resist the urge to grow, and by all means, you should always be growing. But you need to be aware of what stage your company is in to do first things first, and what financial and structural challenges face each level of growth.
If you can not maintain the growth that you make, then you risk spending unnecessary money and alienating your clients. This can be avoided by taking your time and doing your research. You should always be growing but grow sustainably.
About the Author: Kaylee Spivey Good
Kaylee Spivey Good is a content writer for Comarketers specializing in storytelling and creative writing. She is a trained actor, writer, academic researcher, and visual artist. When she is not writing intriguing articles for Comarketers she can be found performing and directing both on stage and film, studying classical art, painting art at her art studio, or playwriting at home with her pet cats.