By Vincent Dajani
Growth planning plays a vital role in the success of your business. But before you can sit down and say, “This is how we want to grow,” it is important to understand why you want to grow. You want to make money, but that can’t be the only consideration. The “why” comes directly from the type of value that you’re hoping to build for your company. Once you define your company’s value, and who is affected by that value, you can begin to plan for growth.
We all know that businesses need money to function, and business owners want their companies to make money. But growth-planning experts agree that if you focus just on increasing the amount of money you make, it is actually detrimental to your business as a whole. In the short term, you may see increased revenue by focusing solely on profits, but what about your company’s long-term viability?
“Pushing too hard on one thing has an effect on another,” warns Kent Malwitz, president of UMBC Training Centers.
He understands that more and more businesses are looking to balance sustainability, employee retention and customer satisfaction, and not to focus on short-term gains. “We can have a great year for revenue, but then it will go back down because we haven’t built up the value of the company,” he says. “I don’t feel like focusing on revenue is sustainable.”
Instead, successful business owners point to that elusive word, “value,” as the key to growing their company. “During our meetings, we used to say, ‘What do we want to make next year?’ and we changed it to, ‘What kind of impact do we want to have next year?’ and then ‘What kind of impact does that set us up to have the year after that?’ And that set us up to grow. We set goals in terms of impact instead of revenue,” Malwitz says.
So if growth is accomplished by increasing a company’s value rather than just its revenue, how do you go about defining value?
Determining your value
Value is a vague term that means many things to many people. But what it means for your business could be the most important thing to define. One great place to start is to ask yourself, “What is our differentiator? What makes us stand out above the rest?” From there, your answer points you in the right direction.
“We take a step back and say, ‘Okay, what else could we be doing, even if it isn’t in our contract? What else has to be brought to the table?’ We always want to make sure that our clients are happy and satisfied. We found it better for growth to enhance relationships with new clients rather than to go out and pitch new ones. It’s about finding that balance and marketing yourself,” says Mostafa Razzak, principal of JMRConnect.
Shae Hong, president and CEO of Sensio Inc., agrees: “You’re not running a business to look at revenue, you’re doing it to build long-term brand value.”
Entrepreneurs start out by trying to solve a problem, but get lost in the sea of paychecks and profits, and when it comes time to expand their business, many CEOs will turn to revenue as the marker. “The first five years of business, we focused on revenue,” Hong says. “Our business was fairly big at that point, but you start to feel your ceiling. And I saw the risk of us losing business if our brands weren’t more valuable to our customers. Anytime you’re scaling a company and you don’t have all of the infrastructure in place, things can fall into the cracks.”
Adapting to industry changes and noticing opportunities based on what each business can provide exceptionally enhances value and, by extension, generates growth. For example, with the introduction of the Affordable Care Act in the healthcare industry, the needs of doctors and patients changed rapidly. “For the patients, the value we try to bring is coordination of their care. By making sure they get the right post-acute services, we make sure that they stay healthy and stay out of the hospital. And those are the significant impacts,” says Scott Rifkin, MD, CEO of Mid-Atlantic Health Care.
Growth through value
If growth comes from value, CEOs have to plan how to increase the value that their company brings. Hong, whose company’s value is in its brand, tracks his customers’ satisfaction and keeps his team in excellent shape. “When I realized that I needed to invest in infrastructure, I hired our COO, and brought in someone who knew how to grow a business. You’ve got to make sure that you have the talent and expertise. The moderator of an off-site planning meeting helped us identify which things were important, and helped us plan how we were going to change them,” he says. “My top tips are investing in the brand, investing in the management, and switching your planning off site to get your team to engage and be open, and put everything on the table.”
Data and customer feedback are key to growth planning for any business, and both have been tremendous positives for Razzak. “We like to do client trials in terms of products and services. We have our own social media application, and we let clients use new products and services to determine the value they see in [them]. We keep the client first in every decision that we make. We do annual reviews for each of our clients. We ask them to be hard on us — what did they like, what didn’t they like? Then we ask them about things they would be interested in, and things that they would like to try, but they might not have the resources. Then, when we do our meeting internally [and] we go over that.”
Customer satisfaction is certainly important for growth, but a successful business also needs the right talent to help back it up. “Outside of revenue, the biggest thing is the value in our people. We make sure that our people are equipped the way they need to be. People development is one of the key things we focus on,” says Mark Ellenbogen, managing partner at BDO. “We think a lot about how we’re developing and tracking the right kind of people. We recruit actively out of colleges around the country. We spend a lot of time with our involvement on campus, getting to know the students and the programs. We have a very robust national training program.”
Once you’re confident of your company’s value, it’s all about looking ahead. Growth means more complexity, more people, more reports — and business owners have to track all of it. “We try to manage our ratings and reviews,” says Hong, adding that Sensio answers any questions immediately. “We monitor [ratings and reviews] weekly, and we use that information to identify a potential problem. We also use it to see customer engagement. Once we started paying more attention to customer satisfaction, it increased our visibility. It has helped grow our business because we have a high customer satisfaction level, which means [customers] know they’ll have a good experience.”
The important thing to remember is that every business is different. Every business has a unique value to bring to the table and a special way to track impact. Once business owners find that value, they’re off on the right track to planning growth for their company.
We asked local leaders to share their growth planning experience and elaborate on how they determined their company’s value.
“For us, adding value is really centered around leadership and making sure that the companies that are represented on our board are the right people. We want to make sure that job seekers are prepared for the jobs that are in demand today. … We also measure growth from the number of people coming to us looking for training, and those who have had a positive experience with us. We’re planning to do a customer service satisfaction survey at the end of this fiscal year. The value proposition for us is our brand name and reputation. When companies and employers come to us to post jobs in our system, do they know we’ll send them valuable applicants?”
“We believe our competitive edge comes from our culture. Value for us isn’t measured in profit, it’s measured in the quality of our work; and culture plays a huge role in that. We want every employee to be invested in the culture of our company. We have five core values that we live by: Fearless, Original, Creative, Unrelenting, Strategic (FOCUS). Every Monday, we meet as a company for breakfast and an employee gives a talk about our values related to something they are passionate about. Topics range from the Dobsonian telescope to dachshunds. We believe that culture is built through doing as much as talking, so after work we get together to participate in boot camps, jiu jitsu and trivia nights. Through this mixture of learning and participating, we add value by building the culture of Red Peak.”
“The benefits we provide our employees are a big part of our company value outside of the salaries. Paid time off is very important to them, and we also close with pay between Christmas and New Years. We have a creative space in the office, and every Wednesday we have a wind-down Wednesday. There’s a higher value placed on things other than salary with the newer generation. We have a quarterly lunch in house where we talk about our annual goals and where we stand with them as a company. We look at client contracts, and it’s a great communication effort to keep everyone in the loop. The benefit from my perspective is that we get people who have a high energy level and feel appreciated, and we’re seeing that in retention.”
“Like most firms, we measure key performance indicators such as revenue, profitability, staff size and number of clients. While controlled growth is an objective, it is not our highest priority. More important to us is maintaining our ability to provide the quality of services that our clients expect, while also maintaining our profitability and firm culture. Therefore, we only target opportunities where we bring the highest value. We pursue strategic relationships and key clients who benefit from our expertise. We have a number of nationally recognized subject-matter experts on staff, and our clients recognize this diversity as a core characteristic of our company. We have an annual planning and budgeting process during which we evaluate our opportunities and goals, perform a SWOT analysis and finalize goals. We also monitor our performance on a monthly basis.” CEO