When business growth slows to a halt, something is wrong. Slowed growth is one of the biggest red flags that your company needs fresh, growth-focused strategies. But do you know how to make a business growth plan? In this article we’ll cover how to identify why your organization’s business growth stalled and what you can do to revive your business.
First, consider overall economic factors that can contribute to decelerating growth. Right now, the world’s three largest economies—the U.S., China, and Europe—are experiencing a major economic stall. The World Bank is predicting a period of growth loss and stagflation that could last into 2024 and beyond.
The full impact of this global slowdown is hard to avoid completely, but your company can blunt the impact. A strong, growth-focused business strategy helps your business function in the face of challenging outside factors. With the right leadership team and growth plan, it’s possible to future-proof your business and stay successful no matter what comes.
Do You Know Why Business Growth Stalled?
Clues to stalled growth are all around you. In some sectors, it’s obvious that business is slowing because the cash inflows are simply smaller than the outflows. When you tally up the weekly and monthly numbers, it’s not adding up to growth.
In other industries, it’s more difficult to understand what’s going on. Perhaps you don’t run a cash-based company. Maybe your leadership team isn’t well-trained on business basics or is heavily dependent on abstract factors like long-term relationship-building.
Broadly speaking, the key indicators of imminent slowing or stalled business growth are:
- Reduced revenue
- Lower profitability
- Poor lead generation
- Low deal close ratio
- Dwindling foot traffic and/or web traffic
Your leadership team may also be seeing worrying trends like a slowing revenue cycle, difficulty hiring new people, high employee turnover, poor online reviews, and bad customer/employee satisfaction ratings. These are symptoms of deeper problems, so resolving them requires some digging and introspection.
Why does business stall? When the Harvard Business Review (HBR) looked at the causes of “stall points” in more than 400 of the world’s most famous companies over several decades, the top causes included:
- Changing customer tastes
- Lack of plans to sustain ongoing growth
- Inadequate reactions to falling performance metrics, including poor diagnostics
- Strategic missteps due to cultural/organizational resistance
- Inability of senior leadership teams to see changes and adapt
Most notably, the HBR researchers found that the common causes of stalled growth “turn out to be preventable for the most part.” Although managers sometimes try to blame outside factors like economic forces, new laws, and even acts of God, most root causes “occur for reasons that are both knowable and addressable.”
To put it another way, your business can prevent stalled growth. Address each of the points above with a solid business growth strategy that guides your leaders and encourages them to stay goal-oriented as they proactively pursue growth.
How to Make a Business Growth Plan
One of the most important growth strategies in business is having a formalized growth plan in place. If your organization doesn’t have one, creating one could be the best way to boost growth and reverse an impending downward trend.
To learn a step-by-step approach to developing a new growth plan from scratch, or to improve an existing plan, take a look at our related blog post, The Ultimate Guide to Business Growth Planning.
How to Measure Business Growth Effectively
After your organization creates and implements its new business growth plan, track its success by using growth and performance metrics. Focus on the 6 main areas involved in measuring business performance:
- Financial statements, including income, balance sheet, and cash flow
- Customer satisfaction as measured in surveys and ratings
- Lead generation/new customer contacts
- Employee performance
- Market trends
- Owner/board/C-suite satisfaction
Now build a list of mathematical metrics that will allow you to track your company’s performance more closely over time. These metrics put numbers to the trends, illuminating whether your business is growing or slowing.
Key business growth metrics include:
- Employee engagement: High employee engagement sets the stage for growth.
- Customer acquisition cost (CAC): If acquiring a customer costs more than they spend with you, growth is very difficult.
- Production metrics: These metrics are specific to your industry, like seeing growth in “more widgets delivered.”
- Time-based measures: This involves activities like shortening your sales cycle for more closed deals or lowering the amount of time it takes to manufacture and deliver something.
- Profitability: Look beyond revenue alone and see whether your core costs are contributing to rising or falling overall business profitability.
- Digital metrics: Is your web traffic increasing? Are people downloading your whitepapers? Is your cart abandonment rate looking better with your new growth plan in place?
- Retention metrics and customer lifetime value (CLV): Measure whether you’re retaining more customers and employees, and track the increased value of their loyalty. Over time, you should see encouraging upward trends in CLV and retention.
For More Information About How Good Leadership Impacts Company Growth
Strong business growth requires strong leaders. For help designing and implementing a growth plan that gains maximum results, engage with Leadership Resources. We offer services that focus on leadership skill-building and helping small-to-midsize businesses reassess their growth strategies and find greater long-term success.
To learn more, please download our brochure, Accelerate Operating System (AOS).
