Business Growth Points

The development trajectory of any business is not linear.

Sooner or later, a moment comes when a decision must be made – where to go next and what needs to be done for this. How to approach this issue correctly and not bet on the wrong horse? Let's try to figure it out...

A business leader, especially its owner, always thinks about tomorrow. The search for business development opportunities is not just an entertaining mind game; it is a necessity to ensure profit potential for the future. Today's "cash cows" will grow old tomorrow and will not be able to feed their owner, and if new ones are not grown in time, the company's capitalization will sharply decline.

The choice of new business growth points occurs simultaneously in several dimensions: product, customer, geographical... There are no fewer options than in a game of Go, but you are not playing against one professional, but against all your current and potential competitors. And if the environment is turbulent and the market is shrinking, you get a constant time crunch as a bonus, when the time to think through moves is minimal. Nevertheless, large, even medium and small businesses, cannot make unreasonably risky decisions; that is the lot of startups, and that is precisely why natural selection in their environment is so merciless.

Those companies that know how to prepare strategic decisions and play, thinking several moves ahead, are usually successful in the market. "Foresight" and other mysticism are inappropriate here, nor are projects like "let's try working in tenders, everyone can do it – what are we waiting for..." or "starting tomorrow we supply to Israel because my old friend called me after 10 years and assured me that his flower-selling company has all the capabilities to exclusively represent our construction materials...".

Only cold calculation and strategic market analysis are the basis for making decisions about business diversification when identifying growth points.

What should you pay attention to from the point of view of searching for growth points, and what information should you collect to find a balance between the costs of strategic marketing and the results in the form of growth in sales volume and margin? In our opinion, you need to focus your efforts on the following basic points.

1. Product Line

As psychologists say, start with yourself, and here it's pointless to argue. Assortment policy is always within arm's reach, but working with it is as hard as raising your own children. Over the years of working at enterprises, especially manufacturing ones, a whole layer of products accumulates that are produced because... well, simply because no one thinks about why. As they used to say at one of my places of work (not in business) – that's how it happened historically. As a result, we have an unreasonably inflated line and high costs. Even worse, often consumers themselves do not understand what to do with such a wide and vague offer of goods and services, losing an understanding of their value. Analyze and cut, especially since any marketer knows the ABC method.

The second question here is – what to replace it with? And it is more complicated. To take away and divide, as a historical excursion shows, is much easier than to add and multiply. This will require a whole toolkit, which in general can be aimed at two tasks – what the market consumes but we do not produce (competitive intelligence and benchmarking can help) and what no one produces, but the market can / should accept and reward the pioneer with "cream." It is not always and everywhere possible to answer the second question, but it should be approached from the standpoint of interdisciplinary research and the development of the R&D segment at the enterprise. This will acutely require a strategist marketer who, possessing methodologies and technologies, will get time from you to study the industry and will be able to generate market-driven tasks for the company's research and production unit. Pure art, but it will be recognized by society not in 100 years, but much earlier, if the picture develops within your business.

2. New Types of Customers / Sales Channels

The search for business development opportunities from the perspective of reaching new types of customers will be successful if marketing at the enterprise is closely intertwined with commercial and sales activities. The task of the manager here is to form such a model of joint work between sales and marketing so that information between them moves at the speed of determining the spins of photons in an entangled state (spoiler: while this speed is not precisely established, it is at least 100,000 times faster than the speed of light).

Very often, a qualitative breakthrough in working with customers occurs in such formats of organizing the work of the enterprise's commercial block where the head of marketing and sales is de facto one person, possessing the initial information, methods of processing it, and skills in selling to key clients. However, such a situation is not always possible and even less often is it justified for work over long periods and with a large sales "geography." It is much more productive to form a system for collecting information "from the ground" (see the article about census) through "field" salespeople, develop algorithms for its processing and transformation into hypotheses for making management decisions, and ensure coordination of interaction procedures between the marketing service and the sales department for the development of the company's client base.

At the same time, the marketer here must ensure the balance of decisions from the point of view of the availability and quality of the company's internal resources, so that reaching new consumers (clients) is economically feasible and strategically justified.

3. New Geographical Markets

Specialists working in sales often imagine a country as a kind of uniformly colored area on a map (like on a world map in a 6th-grade geography textbook), where the products of their company fall into like an abyss, but it is clear that in practice everything is much more complicated. An enterprise that intends to develop sales geography at least beyond its home region should carefully approach the study of market specifics from the point of view of its territorial characteristics. There are goods and services that are consumed approximately the same everywhere, and there are those that require significant adaptation even within one federal district. The influence of geography on sales structures and the effectiveness of various promotion tools is even stronger. Often they are even higher than the differences in the requests of different types of clients. Working in such an environment is possible only if there is a developed system for collecting and analyzing information about markets in a geographical context.

Any geographical expansion, even into a neighboring region, must be prepared and justified by numbers. After all, no one seriously considers the situation that a howling country would invade the territory of an enemy without conducting thorough reconnaissance of the area. So why in business do they more often follow the controversial expression that courage takes cities? Because in case of subsequent failure, top management will remember the proverb – soldiers surrender cities – generals take them? It's better to just prepare, and most importantly, it's much cheaper.

A separate topic is the choice of directions for export. You so want to become an exporter, get a 20% VAT refund, and indicate in the press release that you supply... well, the further, the better, and if to Western Europe or China, then life has undoubtedly been a success. However, in practice, all the problems of searching for new geographical markets outside the Customs Union described above can be multiplied by 10. The price of error here is especially high, and luck will favor not the brave, but the calculating.

When entering new export markets, the company's marketing (and not only it) must be prepared to solve tasks of a different level of complexity. It will be necessary to collect a wide range of information on working in a specific product market of the country (the sales geography of which is also not a uniformly colored area of the map), and for this, it is necessary to know specific country barriers, production and sales statistics, compile a map of competitive groups, analyze successful and unsuccessful examples of imports into the country, and identify those niches that can potentially be filled with an existing or prospective product.

Some block of information can be gleaned by using open data (for example, the resources of the Russian Export Center), but all commercially significant information will require time and money, and you need to move gradually, testing hypotheses about promising markets of the world, working out in detail only those that at the previous stage proved their attractiveness specifically for you.

The reverse situation can also be mentioned – the search for niches for import substitution in one's own country. For this, you can and should use customs statistics data and, through the analysis of import flows, identify those unmet needs of local production that you can potentially satisfy. Again, painstaking analytical work and no magic of the "third eye" of effective managers.

As you can easily see, the search for business growth points is always associated with serious analytical preparation. It can be carried out by the company's forces using internal resources or by involving specialized organizations. This decision is within the competence of the company's management. However, it is worth remembering that in any case, this is serious work that will require temporal, intellectual, and financial resources. It is necessary to correctly select combinations of such resources to find the direction where you will grow herds of new "cash" cows for your business.