August 2022 Volume 4

OPERATIONS & MANAGEMENT

Forging a Path Toward Growth By Howard J. Kass

Nearly every business seeks to grow. That’s a given. But, the path to growth is never as clear as a business owner wishes. Many business owners believe that the path to growth is simply to sell more . . . more products or more services but it is never that simple to grow a business. While doing more of what you already do, i.e., selling more to your existing customers, can be a viable growth strategy, it’s probably not the best one. Why? There are several answers to this. The first reason is change. Not just change for the sake of change, but the need to keep up with all the change that surrounds us. The change in technology, your industry, and your customers. I’ve heard it said that, if you stand still, you’re falling behind, because everyone else around you is continuing to move forward. Putting this in terms of your business, when your current products no longer fulfill the needs of your ever-changing market, demand for them will begin a downward trajectory. If you have chosen to rely on the “selling more” strategy, where will this leave you? The next reason is that there is probably a limit to howmuch of your current product or service your customers need at any given time. If they just purchased from you a short time ago, they’re probably not in the market to buy more of what you sell, yet. This is particularly true if your product is a high-ticket item, or a specialized product or service that isn’t needed with great frequency. Even if you are selling a consumer staple of some type, while repeat sales may not be an immediate issue, youmay experience a saturation

of your market, as well as increased competition. With that market saturation and increased competition will come downward price pressure, resulting in reduced gross margins. So, while you may be generating a relatively high volume of sales, you may not be realizing the profits you need to sustain success. Even if the “sell more” strategy is working for you now, would it not make sense to prepare for the point in the future when it doesn’t? So, if selling more to your existing customers isn’t the best way to grow your business, what is? This is precisely what we teach in the Goldman Sachs 10,000 Small Businesses Program (10KSB). To truly grow your business, it’s important for you to identify a growth opportunity for your business. As we teach our business owners, who we refer to as scholars, a growth opportunity is a new product or service that you offer, or a completely new market that you enter in which to sell your existing product line. While this sounds like a simple concept, it is one of the most difficult concepts for most of our scholars to grasp. Why? People like to gravitate to that which is familiar. So, while the business owners with whom we work understand at an intellectual level that they need to identify a new product, service, or market, they usually struggle to do so. It is within their comfort zone to continue doing what they already do, and it is outside of their comfort zone to do something different. What does it look like to identify a new product or service to sell to existing customers? This is what the business community usually

FIA MAGAZINE | AUGUST 2022 46