Continued business growth in mid-sized companies is often viewed as a marker to an economy’s health. So what strategies do they use to stay healthy, and how can you employ them in your SME or startup?
Recently, Cameron Research released the results of their latest study on the state of the Australian economy as viewed by SMEs.
This particular study focused on Mid-Market businesses (that is, those businesses that turnover between $10 million and $100 million), as they are regarded as being a sound barometer of the state of the economy.
Key findings from the study were:
- Mid-market owners report that business conditions are quite good. Some participants even report enjoying boom times.
- Many are concerned about the broader environment. They sense a lack of confidence which impacts their mood towards their business and willingness to expand.
- Most mid-market businesses are investing in their businesses but doing so in a controlled manner.
Given this cautious sentiment of business owners, what can mid-market size businesses do to drive growth?
The 7 business growth drivers for middle-market companies
In 2018, the National Center for The Middle Market in the United States conducted a study to understand the characteristics and growth drivers of middle-market companies.
Obtaining a clear definition of the middle market is challenging as various bodies will define it differently. Some use number of employees others based it on revenues. The National Center for the Middle Market defines it as companies with revenues between $10 million and $1 billion.
A key focus of the study was to examine companies that continued to grow despite challenging conditions and low economic confidence.
They identified 7 aspects that middle-market companies, regardless of the industry they operate in can utilise, all of which were in the companies’ control:
- Market Expansion
- Formal Growth Strategy
- Investing & Innovating
- Attracting and Retaining Quality Staff
- Financial Management
- Cost Efficiencies
- Staff Development
Other studies on business growth such as the Association of Chartered Certified Accounts (ACCA) global study on Small and Medium Businesses also identify similar growth drivers.
The National Center study found that Market Expansion through the pursuit of new customers and/or moving into new geographies had the greatest impact on growth.
The study also identified the characteristics of “Growth Champions”. These are companies which experienced annual revenue growth of 30% or more. This National Center study revealed that Growth Champions stood out and were ahead of other middle-market companies with regards to the following:
- 73% of companies growing at 30% per year or more considered themselves to be very effective at entering new geographies compared to only 55% of companies experiencing 20-29% annual growth
- Another National Center study found that sales teams at fast-growing firms excel at developing customers that is, turning smaller customers into bigger ones
Formal Growth Strategy
- 73% of high growth middle market companies have a long-term strategy
- Their growth strategy processes include setting multi-year and annual growth targets, tracking progress toward those targets and communicating them to all levels of the business
- 66% of high growth middle market companies reported that they keep up with the latest management techniques compared to 40% of all other middle-market companies
Investing and Innovating
- The study found that that the fastest growers
innovate and invest both in:
- WHAT they have to offer (i.e products and services)
- HOW they deliver (i.e. the business systems, processes, equipment and facilities necessary to deliver those offerings
- Rapidly growing firms are thinking about not just what to do now to meet demand but they are also planning and investing for the future
How to deploy business growth strategies at the SME level
Now despite that this was a US-based study and that there are varying definitions of mid-sized firms, there are lessons and implications for both small and mid-sized companies that are seeking growth by selling products and services to other businesses (that is, through B2B markets)
1. LISTENING is a core component of working ON the business.
It is imperative the businesses are “LISTENING” on two levels:
A. Listening to customers
- Listen to both current customers and non-customers including prospects, ‘defectors’ (i.e. those that have left) and those that have never bought from you
- By doing so you can identify changing requirements and priorities, underserved customers and unmet needs
- Reminder: We are B2B, so it is important that you can a BUYER view!!
- Consider using the following listening approaches:
- Decision Maker Forums
B. Listening to the market
- Understand the trends, developments, regulations, economic conditions and performance of your target industries and geographic markets
- Examine adjacent industries and other geographic markets to identify:
- What could possibly be adapted to the current industries, markets and customers your company currently serves
- Identify new customers and/or new offerings
2. Business innovation drives business growth!
Develop a business innovation strategy for your company.
Look for opportunities to innovate beyond new products and/or new technology.
Reminder: Innovation does not mean Invention!! It means looking for new introductions and/or new improvements that can be implemented into your business.
Other ways to innovate include:
- Process Innovation
- Seek opportunities to introduce/improve your processes and systems
- Organizational Innovation:
- pursue opportunities for collaboration and strategic partnerships which can provide you with access to skills, capabilities, more potential customers, ability to expand your product and service offerings
- Marketing Innovation:
skills and capabilities to develop and implement B2B strategies such as:
- Advocacy Marketing
- Influencer Marketing
- Buyer Enablement
- Build skills and capabilities to develop and implement B2B strategies such as:
Studies conducted by Commonwealth Bank of Australia have shown that companies that innovate in more than 2 areas experience the highest levels of growth.
3. Leverage your customer base to drive growth.
- Grow current customers by continually understanding their priorities and challenges and providing them with insights, information, tools and advice
- Proactively manage your customers (and prospects) using Account Based Marketing approaches.
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About Michael Haynes
B2B Customer & Marketing Strategy Consultant
For over 20 years, Michael has worked with micro-businesses to large corporates alike across Australia and Canada, developing and implementing business growth strategies and programs.