Tips to keep your business growing during the coronavirus

The world won’t be as it was before. People have changed their habits and daily routine, and now companies have to deal with revenue decline, new consumer behaviors and an unknown future. In few months many things have changed, e-commerce and online shopping have grown, people have started working remotely, and they will for a little while, and almost any form of entertainment from museums to concerts has disappeared. We are assisting to big changes that are going to stay for long time, if not forever. In these uncertain times, companies are trying to identify new consumer attitudes, behaviors and purchasing habits. There are services and products that no longer work in the current environment and consequently companies have to find creative ways to pivot and offer products and services that work. 

You have to act fast. This is mandatory.

But how can you identify new business scenarios and trajectories?

You need to align your business with the new reality.

Here are few tips that help you align your business:

Check your financial health: First, if you haven’t done yet, you need to address your financial situation, monitor and manage your cash flow to guarantee stability. In case of financial instability, you should review expenses (e.g. marketing, advertising, investments…), and optimize resources.

Assess your customer base: It’s extremely important to stay connected to your customers. Who are they? Monitor and understand what they need and what they want. Test the market on a regular base; new habits will be created (e.g. from going to Starbucks to drinking premium coffee at home), pay attention and be prepared. Consumer behaviors are continuously changing and shifting, so be ready to offer what people want.  

Execute new business models: I’m a big promoter of flexibility and adaptability. During this pandemic it is more true than ever, traditional business models don’t work, therefore assess your current business model and see if it’s still relevant and suitable for this new world, think about how you can adapt and design new business models. Do you have capabilities that can be used in this new contest? What does the market needs and wants? Investing in agile teams is an option? How is your supply chain?

Review your forecasting models: Forecasting works best when you have historical data and the future is seen as an increment of the current market. During the coronavirus many forecast models are not longer accurate. This pandemic has disrupted both demand and supply and forecasting won’t get you any valid insight for the long term. 

I believe market research and consumer behavior are more important than ever during this pandemic. Invest in an internal and external analysis. This is a full checkup for a fresh start. 

Leadership and culture are key drivers for digital transformations

Statistics prove that digital transformation leads to revenue growth. If companies want to evolve, they have to embrace digital transformation and challenge the status quo. 

According to BCG, companies that have transformed digitally outperformed laggards by 13% in yearly revenue growth. 

Despite these positive results, why are many companies still not exploring the full potential of the digital transformation?

The spectrum is quite broad. A few companies have fully adopted digital transformation, while the majority adopted some sort of change, but they weren’t able to completely disrupt their organization. Over the years companies have been forced to transform their processes and products, because new competitors entered the arena (e.g. Airbnb, Uber). However, the majority made partial changes and took small steps into this direction, keeping the same business model, same customer structure and same operating systems that they had 10 years ago. They moved forward, creating a new website, or improving their digital content, but they embraced this change in terms of new advanced technology. 

According to McKinsey, although 9 out of 10 companies are engaged with some sort of digitalization, only 1 in 6 is creating a bold strategy.

If you follow what your competitors are doing, most likely “you are doing digital” but “you are not digital”. Being digital is strategic; it involves a change in your mindset, instead of simply following what your competitors are doing. 

To embrace a real transformation is necessary an internal change: companies should look more holistically at their organization, make a 360 degree change, and rethink the organization in terms of leadership and culture, approaching a new way of thinking, and then innovating products, processes and business model. 

Companies that have succeeded in this change share few elements: 

·      Clear Strategy: defining what the organization wants to achieve with this transformation;

·      Operational agility: being flexible, and adapting overtime.

·      Organizational structure: not more silos structure but more cross-functional teams.

·      New culture and leadership: embracing a new culture that fosters change and risks.

·      Workforce enablement: empowering people, developing their talents and skills.

·      Customer centricity: putting the customer first and being adaptable to their needs.

·      Digital technology: investing in technology, software, AI, innovative products

A digital transformation is a merge of technology and strategy. If you want to succeed, you have to be agile, adaptable, willing to take risks. Experiment, rethink, fail fast and learn fast.

Is a SWOT analysis relevant?

There are many tools and techniques that can be used for strategic planning, and a SWOT analysis is one of the most effective to use. It’s the starting point of your strategy, and it helps identify internal (strengths and weaknesses) and external (opportunities and threats) factors. 

Is a SWOT analysis still relevant in the 21st century? Is it really essential?

SWOT analysis has been an important tool for years, and now with new technologies coming up it’s legit to ask if it still has value. 

I think it’s a great tool to start, and it is the foundation for a business strategy. In fact, it shouldn’t be considered a tool per se or a list of elements to check. “I wrote down a few good things a few bad things, I’m done, and now we can move on” … no, I disagree, this is not its purpose. 

A SWOT analysis is the starting tool for further analysis. It provides relevant information and insight to be used in the following steps of the business strategy. 

Quite often managers and consultants don’t spend enough time on this kind of analysis, thinking that it’s only a formality. They prefer going straight to the core, in reality they lose an important piece of information. 

so, how can you prepare a SWOT analysis that is relevant?

1. Be concise: state 3-5 elements for each quadrant, and avoid a long list. Focus only on a few more important aspects and develop them deeply. 

2. Be specific: Avoid general terms and be more specific. Indicating something that is too general doesn’t help to develop a winning value proposition. As I said above, the goal is not to prepare a shopping list, but to provide relevant information to be used in the second step. 

3. Use in tandem with PESTLE: SWOT and PESTLE complement each other and they give more insight to better understand the full picture.

4. Avoid opinions: conduct your analysis on facts and data to avoid biased opinions

5. Brainstorm: hold a brainstorm and ask each member of the team to work individually. 

Nowadays, there are many new modern tools in strategic planning, but I think a SWOT analysis is still valid if you use it methodically.

How can you handle your growth rate?

A critical metric that any company should take into consideration is the growth rate. 

Despite the differences in business models, every company, especially those in the early stage, feels the need to grow for two reasons:

- External pressure: the company needs to secure funding. Before investing in a startup, investors determine if the investment is attractive. Presenting revenue forecasts to investors is always tricky. In fact, if it’s too low, it doesn’t show an opportunity, and investors are not eager to bet, while if it’s too high, it’s unrealistic and hard to reach.

- Internal pressure: the company wants to maximize profits and create economies of scale. If the company grows too slow, then it doesn’t have enough resources to allocate or if it grows too fast, it impacts operations becoming hard to manage. 

Growth rate is not easy and simplistic to calculate and handle. In fact, one of the biggest challenges is handling a rapid growth.  Business owners have to be very careful and prepared to avoid operation and financial issues. 

According to Paul Graham, the growth of a successful startup usually follows three phases:

For the first months (24 months) the rate of growth is almost zero. In this phase, the product has been launched, and the company needs to verify if there is a demand for that product or service. Afterwards, in the second phase, the product has gone to market, been tested and finally it starts getting a product validation. At this point it starts picking up quickly and then finally it scales after the 36th month. During this phase the company starts experiencing some rapid growth. 

So, how can you manage a rapid growth?

a) Analyzing statistics: keep an eye on numbers, financial and operations ratios (sales, assets, overheads, inventory...). These elements are important to determine where you stand financially and which measures to take. 

b) Creating an excellent customer experience (CX): focus on customer feedback and understand where you are in the market.

c) Staying lean: aim at optimization and continuous improvement 

d) Investing in the right resources: choose and train people who are a good fit and align with your values

e)  Being flexible to adapt to the changes in the marketplace.  

In the end, the goal of business owners is to make sure the business is growing and the growth is organic.

There is always a high level of uncertainty and many variables to consider. If you want to grow organically, spend time on your product, test and adjust based on the market’s response, listen to your customers, and be ready to change QUICKLY.

3 elements for a strong brand positioning

For a sustainable growth it’s extremely important that companies define the correct positioning and adjust it over time. Positioning is the space that a product owns in the mind of the consumers: what they offer and how they differentiate themselves among the other competitors. A strong brand positioning distinguishes your product from the competition and helps attract your target audience. A wrong positioning can mislead customers or attract the wrong target, impacting your business. 

A strong positioning should include 3 fundamental elements:

1. Clarity: market research and analysis are the preliminary steps in the strategy for a correct positioning. Through an accurate market analysis, you can clearly define your positioning statement, answering several questions: what benefits do you offer, what values do you deliver? What is so unique about your product that competitors don’t have? Who are your competitors? Where are they located? Who is your target audience? 

Many companies focus their attention on their products’ features and ideal customers. It’s great, but not enough, it’s really important to spend a good amount of time to understand the competition and gather more insight of the market. Do all your research and don’t develop a marketing strategy before you have well-defined where you stay in the market.

2. Uniqueness: in a hyper competitive world, if companies want to survive, they have to find their market niche and offer something that others don’t offer: this is what is called in marketing unique selling proposition. It is anything that you are doing better than the rest. It can be a new feature, high quality, excellent customer service, or a great customer experience. Be aware that if you choose to compete on price, it might be a steep path, since you always need to keep up with prices to stay competitive. On the other hand, differentiation strategies allow you to charge a premium and be more successful in the marketplace. 

3. Fluidity: nowadays everything is moving very fast: new products, new competitors, new trends, new consumer behaviors and habits. When you decide to design your brand positioning strategy, challenge the existing situation, apply a forward thinking approach, and project your brand in the future. Markets are dynamic, and what is true today might be different tomorrow. 

Identify your right customers

You worked on your product for months or even years, you studied every small detail and now it’s ready to be sold. So, whom are you selling it to? Who are your customers? 

As Simon Sinek stated in “Start with why”: ‘Most companies have no clue why their customers are their customers. If most companies don’t really know why their customers are their customers [ ], then how do they know how to [ ] encourage loyalty among those they already have?’

Understanding your customer’s needs and wants becomes a critical component for your success. Definitely, you can’t persuade somebody to buy a product if they think they don’t need it or want it.

In fact, many entrepreneurs create wonderful products, but they don’t research and understand their audience. They might think they know who their customers are, but quite often they really don’t know. 

So, how do you find your right audience?

a) Market Research

You should conduct market research and customer intelligence to identify whether your product or service can satisfy your customer base. Through market research you can collect data about market trends, competitors, demographics and purchasing habits. Initially, you can start with secondary research (existing research), but in a second phase I would recommend using primary research. The most common examples of primary research are surveys, interviews, focus groups and questionnaires.

b) Segmentation

You should segment (group) the market, where people in each segment have similar characteristics, not only in terms of demographics but also psychographic and behavioral. 

Be specific and find your niche.

You don’t want to sell your product to everybody; it would be too generic and you would lose focus on the customer and, on the other hand, the customer might not identify himself/herself on your product. You won’t deliver exceptional customer experience, and you won’t be competitive. You risk targeting everybody and then you are not different from other thousands competitors. 

c) Create buyer personas

You should create a semi-fictional description of your ideal customers, including demographics, location, hobbies and interests, spending habits. In case, you target more than one niche, I suggest creating more than one buyer persona. Buyer personas are important to give you a better understanding and to ensure that all the efforts are directed to the targeted needs of your buyers. 

Business plan: one page or 20 pages?

A business plan is a formal document that describes how the company plans to reach its goals and includes sales and marketing strategies with a detailed financial background. In the past, consultants and business people recommended a formal document with at least 20 pages. Nowadays things have changed, and, although there are still consultants and some business sectors that promote the traditional format, one page business plan or an informal plan is completely acceptable.

How do you decide the best option for you? 

The number of pages is relative, and it would be too simplistic to make a decision based on the number of pages. Business plans have evolved over the years and entrepreneurs realized these plans were too rigid and not practical, becoming a document to keep in the drawer and forgetting about it. This is particularly true in the start-up community, where a lean thinking approach is definitely more common.

So, before starting your business plan, you should ask yourself:

In what industry am I going to operate? Whom do I need to talk to?

If you decide to start your own business in technology, you are in an industry more flexible and agile, where lean thinking is the core. In this case, 1 page business plan or a PowerPoint presentation is very welcomed and appreciated.

If you decide to pitch your idea to investors, ask your bank for a loan or create a partnership, it becomes critical to have a more formal version and the 20-page format is preferred. 

Depending on your use and purpose, you can decide if and how to prepare your business plan. Remember that a business plan is the document for investors, banks and other financial institutions, but it’s also your plan of action, your roadmap. It doesn’t have to be perfect and it can be one page diagram or a business model canvas, but it helps you to stay focused and organized, and eventually change direction when it’s needed.