3 Essential Steps For Determining If Your Business Is Going To Have A Growth Stall So You Can Overcome It In Time

Most companies grow faster in the beginning and then growth stalls …

In the past 5 years, I have been working with ambitious entrepreneurs and business owners and I learned that; if you want to grow your business aggressively you have to know the growth gap, so you can make strategic decisions before growth stalls.

Most business owners fall into growth stalls is because they do not know their Growth Gap.

The Wrong Way Of Thinking About Growth Targets

Here are four assumptions that become a barrier in thinking correctly about growth:

• Thinking that products/services have every growing life that can not exhaust instead of thinking about them as having a lifecycle
• Thinking about their business as one bet that and risking everything to make it work instead of thinking about it as a portfolio of future bets
• Thinking that the future unfolds in a linear fashion just like the growth figures in their spreadsheets instead of non-linear growth rates
• Thinking that their business is running in a fixed business environment instead of a dynamic environment where things often do not turn out as planned

You do not have to change a lot to think correctly about your growth targets, instead, learn how to calculate your growth gap.

Here’s how to step by step:

Suppose you had a plan to reach USD 5 million in 3 years.

Step 1: Determine Segmented Growth Rates

Your business is a portfolio with different growth rates over different segments.

Ultimately these growth rates add up to drive growth but each segment will never grow the same way. See which one contributes majorly to growth today and how is it growing, can it keep growing with that with the same rates?

This will help you put weight on the most important bets.

Step 2: Identify Major Assumptions That Can Go Wrong

Most planning is done with fixed assumptions about the future.

Identify the most likely assumptions you are making today that can go wrong? Maybe you are overestimating the time it will take to reach there, or demand rates are going to stay the same? Or that the costs will stay fixed.

This will help you see a dynamic world instead of a fixed world where multiple things can go wrong.

Step 3: Model The New Growth Rates

Building new assumptions with their likely impact brings out a different picture.

Put weight on the assumptions and run the model with these assumptions and their limiting effects on growth. You will now see that the ambitious target that you had assumed to reach within 3 years with the same portfolio was likely wrong.

Determine your growth gap by subtracting the effect from the target. This growth gap will help you make strategic bets on the right segments and the right assumptions.

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