Are You Growing Your Business in the Right Direction?
When many small business owners think about their business and the future, two words often come up: growth and marketing. I've heard this from one-on-one conversations to networking evenings to pitch events. But when you take the time to dig into what is actually meant and ask questions, what they want isn't always what they originally said.
“What appears to be the problem, isn’t
What appears to be the solution, isn’t
What appears to be impossible, isn’t ”
Let's be honest, what is usually meant by "growth" is making more money. Sometimes that means making more money and working less. Sometimes it means the making the same money and working less. Sometimes it making more money but willing to take on more work to get it. These are very different problems with very different solutions, and the word "grow" naturally drives a solution that will drive more money, but also more work (e.g. marketing).
There is a Charles Kettering quote I come back to often: "A problem well stated is a problem half solved." This isn't the first time I've connected it to situations like this and it surely won't be the last. People tend to look at problems through the lens of how they were trained to solve them. The framing comes from a book I read in college called Strategies for Creative Problem Solving by Scott Fogler. There is a story in it about an x-ray being shown to a room of orthopedic specialists, all of whom diagnosed a broken bone. The actual issue turned out to be pneumonia, or something not related to bones at all. The specialists saw what they saw and it's hard to argue that because several pointed to "clearly" a crack or hairline fracture in the image. The issue is they solved the problem with a mental model of how to solve it. Most of the time when an owner is stuck, the same thing is happening. The solution is more fun to talk about than the diagnosis, so the diagnosis gets skipped, and the wrong problem gets solved.
Before any conversation about growth strategy, the first move is figuring out which type of "growth" is actually the type that is best for this business and this owner.
Three Potential Outcomes to Financial Growth
When you separate "grow" from "make more money," the solution possibilities open up. There are three different outcomes an owner could be after for their defined growth.
Same money, less work (i.e. time freedom)
More money, same work (i.e. efficiency and automation)
More money, more work (i.e. "growth")
The first two are not growth problems at all: they are pricing or cost problems. The third is the only one that maps to traditional growth strategy but even that, there are multiple ways to solve it that do not necessarily mean "marketing" and "social media" which are the common solutions I hear from business owners looking to grow.
Pricing Is the Lever Many Owners Skip
Before getting to traditional growth plans, let's consider pricing for a moment. Imagine a high schooler comes to your door offering to mow your lawn for $25. You have hired lawn services before so you know what good work looks like and you know what the going rate is in your neighborhood. The last service you used charged you $50.
You take a look at the kid, the equipment, the energy, and you tell them you will pay $35. They are thrilled. You are thrilled, because you are saving $15 against what you used to pay. You both win and now you can enjoy some extra Sunday football.
What just happened is the kid was pricing from inside their own head. They picked $25 because it sounded like a fair number because that is what their parents paid them and that's what the other neighbors were paying them. They had no idea what the market was actually willing to pay for what they were offering. The signal lived outside their business and they had no way to receive it until someone like you was willing to do something that no past customer did: pay more than asking.
This is the part of pricing many owners miss. They are not undercharging because they are bad at business. No, they are undercharging because they have no clean way to see what the market would actually pay for what they do.
Now imagine the kid finds a few more customers like you. They could now mow fewer lawns and make the same money. Or mow the same number of lawns and make more money. Or maybe hire someone else to do the new lawns to either make the same money and work less or make less money and work less. Any of these is a meaningful win, and none of them requires a new service, a new market, or even a single new customer beyond replacing the lower-paying ones with higher-paying ones. And whether they have more time or more money, is up to them.
The Three Real Growth Paths
Once a business owner has actually decided they want more revenue and is willing to take on more work to get it, there are three real paths that they could take. Most growth strategy comes down to which one fits the business and the owner and there are tools and techniques for deciding. One of the tools I have used with a client was the Strategyzer Value Proposition Canvas. How I used it was we inventoried all the current or past solutions they had delivered to customers and what problems those solutions solved for those customers. Then we mapped out their current, past, and potential adjacent customers and what "jobs to be done" or problems they have. We then used a "mapping" of the two to see where new connections or current gaps existed. Here is what can happen…
Current service to new customers.
This is what most people mean when they say "grow." Same solution or product, sold or provided to more people. There are actually two versions of this and they are not the same problem. The first is selling to more customers who look like your current ones which is what you would expect when someone is looking to 'increase market share.' The second is taking what you already offer and asking which other kinds of customers could use it, which is getting into new markets. Scalability with current resources tends to be a constraint for both, but the work to get there is different. For example, getting more of the same customers is often solved via paid advertising. You know the customers, you know their language, you just need to get your offer in front of more of them. The second though, you may not know the new customers as well, how they speak or how they may have unique needs, so it takes some more work to get to those customers and ensure that you are selling to someone who needs to buy.
New service to current customers.
This is the most underrated of the three. Your existing customers already trust you and they always say, it is cheaper to retain customers than get new ones. Often times your customers are spending money on adjacent solutions but with someone else. A web hosting company whose customers are buying SEO and marketing from someone down the road has a clear opportunity with you, if you can offer the same solution. The harder work is figuring out what your customers are already paying for that you could provide.
New service to new customers.
This is the most expensive and the most risky, but sometimes needed. A new offer, to a new audience = new everything. Sometimes this is the first thing an owner goes after because they see someone else doing it, likely at higher margins, or because they think there is something wrong with their business for not being able to get the success of this other service they are considering offering. The challenge with this is it can feel like growth and look good on paper, but the reality is it is harder than the other growth solutions and will likely end up distracting your from your core business. So unless you are pivoting the company, be careful that the grass is not always greener on the other side. This is exactly the situation a business owner who I was talking with recently found themselves in. Business was getting tight, people were undercutting them on price so they were looking at a new, business-adjacent service to niche down to hit the margins they needed. It didn’t take long though in the conversation to find out the margins they were looking for were already in the business within a subset of their clients. The problem then shifted to 'how can I find more of those clients to provide my current solution that I know how to provide?'
Define the Growth Problem First
The reason "I want to grow" is hard to act on is that it is a reaction to a symptom of something else and is not a problem statement in and of itself. But to get to the root of the problem, you have to challenge yourself to think about the why behind the desire to grow and what growth looks like for you.
So if you are asking yourself…
"I am working too much and the money is just not worth it anymore." -> Consider increasing your price to reduce your clients.
"I don't want to work more or take on new customers, but we are just not where we need to be " -> consider operational changes to improve margins
"My current customers are saturated with my current offering, I need to do something different " -> Consider the solution/customer mapping (e.g. Strategyzer) to figure out if you need to offer new services, obtain new clients, or both.
