27 Nov Accelerated Business Growth – the Four Stage Model
As I have been explaining growth to a number of business owners lately it’s occurred to me that our way of accelerated business growth can been collapsed into a really simple model;
- Revenue growth. We have to start with revenue growth because, while profits are important, without revenue nothing much else can grow;
- Establishing a board of directors or an advisory board. It’s important this step is commenced much earlier than what most do, in order to build trust and credibility for later stages;
- Creating / adjusting the financial model and the business plan. So am I suggesting you start the business without a plan? For most businesses a rough sketch is far more powerful than a detailed plan when it comes to building revenue. What most founders find is where they thought the gold was is not where it turns out to be, so after getting revenue under control, there is a new appreciation of the business, leading to an adjustment of targets, markets, methods and more.
- Raising growth funding. Whether you’re gunning for a big capital raise, money from the bank or cash flow funding from an alternate lender now is the time to strike. With a proven revenue model and business plan to match
From revenue you can pay the bills, yourself, your future business plan, your advisers and your long suffering spouse/partner, if you have one. Importantly, from revenue growth you rapidly learn if the business works – or not. Which I suspect is why many don’t embrace it; it reveals the truth.
And that’s why you need to start right here.
What I find with most clients is that while the definition of the customer is roughly right, we often need to start with
- Change of messaging
- Change of conversion tactics
- Setting up with new joint venture relationships
And more… However, once revenue growth gets under way things can start going really fast.
Establishing a Board
A board is important not just for capital raise purposes. And they’re certainly not just for making your business look more bright and shiny. They, generally speaking, come In three shades:
- Sounding Board (aka Bouncing Board; they’re great to bounce ideas off)
- Advisory Board
- Board of Directors
Within a week after starting Business Connector I started putting together a sounding board. And many of those people are still around to be a sounding board two years later. Don’t expect formal advice, but do ask for unfiltered opinion and insight; nobody gains from being ‘nice’
The more formal you make it, the more you’ll get out of it. It’s the same difference as getting a family member to help in the business, vs hiring a full time staff member.
Revenue Model/Business Plan
All the great cash flow and revenue models I have seen starts with the basics: How is every dollar made at the level of the individual transaction. From there it builds up, aggregates. Takes in expenses, shows the staff growth. But you have to start with the basics; how is every sales dollar transacted.
When you write the business plan focus on proving just two things:
- Why everybody who is a potential core customer will absolutely love what you sell and therefore want to transact with you.
- Why the investor money is safer with you and has a higher potential payback than anywhere else.
Don’t worry nearly as much about mission, vision and fluff, don’t pain over whether your illustrations are perfect. There will be no illustration more beautiful than the one showing your revenue growth over the last three months next to the list of great advisors or board members you have supporting and believing in the business.
In this context I mean capital raise very broadly. Convertible note, equity, bank loan, crowd-fund; whatever floats, as long as it fills your coffers. The aim of the game is to fill up on cash, to build a war chest so that as you roll out your marketing machine you have lots of juice available to run that machine for as long as is required to win the battle.
If you’re going to the bank, expect it’s all done in two weeks. If you’re raising equity capital expect 6 – 8 weeks. But expect that it will really only work if you have it all prepared.