The Six Growth Principles of High-Performing Businesses

Today I want to get into what I call the growth foundations or the growth principles that are found in businesses that are basically driving a lot of value. So they're growing quickly, they're generating profit, and entrepreneurs and business leaders who are on that ride are usually having a lot of fun.

So the first principle that these businesses have, these attributes that they have, is they have a very clear direction, a very clear destination of where they're trying to get to. This is often called a vision, a vision and a mission. And it is this idea that you know exactly what you're trying to achieve, you know your why and your purpose behind that, and everyone else knows that as well. So you're constantly talking about this vision. You're telling your customers, you're telling your suppliers, you're telling your employees and everyone is behind and galvanized behind this. And quite often the businesses that are really flying, they have a leader at the top, usually the founder or the CEO who's super passionate about this vision. So that's the first thing. Along with that, you've got to have a plan. Sometimes it's called a strategy, a strategy is simply a set of choices that you make to achieve your vision. But you've got a compelling, robust plan, that again is simple enough that everyone gets it in the organization, but powerful enough that it's going to move you towards that vision.

It sounds simple to have those two things in place, and there are a lot of businesses that think they have them, but quite often they have a set of ideas, but there's not enough grounding in those ideas to make it a reality. So it's important to have both of those two pieces in place. The next area is you have to have really, really strong financial management.

You've got to have a cash runway, and you've got to have a way of measuring performance across all the various components of your business. So be that operational, commercial, cultural, it's usually by having a set of dashboards so that you can monitor the performance of your business literally in real-time, it also allows you, the founder, the entrepreneur, to not have to be in the business full time because you can manage it from afar.

The next area and this is getting more into the commercial side and this is you've got to have what I call, a unique solution stack that solves a really quantifiable and identifiable problem that your ideal customer has. So through the strategy work, you've defined your markets, you've defined your customers, you now need to be able to solve their problem with some form of a solution, be that a product or a service. And what often happens is when you start a business, you might be able to solve a problem very clearly because you've spent a lot of time thinking about that. But market's change so rapidly these days that unless you're constantly thinking about what your customers are facing, what their needs are and what their challenges are and also their opportunities, sometimes the product that you created early on becomes obsolete or just not relevant very quickly. 

So once you've got that, you need to then create what I call a predictable flow of the right customers coming into your business, generating recurring revenue, and there are two keywords in this. The first one is predictable.

So you predict how customers come in. So that's leads and how you bring leads and opportunities and prospects into your business. And then this idea of recurring revenue is something that, again, comes back to being predictable and to some extent, sustainable, that you know exactly how revenue is building.

So that can sometimes be by selling product solutions that are subscriptions. It can be having long term contracts, but many business valuations are underpinned by this idea of having recurring revenue. So it must be something that you strive for and certainly really valuable companies that I work with have this in place.

Once you've got that all lined up, you need to have an operating system that allows you to deliver that solution for your ideal customers. So everything in this phase needs to be clear and it needs to be a clear process, clear alignment between various functions in an organisation. I say you should try and automate everything you possibly can because that usually drives the highest levels of efficiency and high levels of efficiency drive profit. But you've got to have a machine and I often say that if you have a business that runs like clockwork, if it runs like a machine, you have a really powerful, valuable business and you have ways of seeing all the things that are either working or not working so that you can focus on making constant improvement. It's called Kaizen, this continuous never-ending improvement. And if you can make sure that the operation runs like that, it literally runs like a machine, then again, that's extremely valuable. 

You'll be generating a lot of money, a lot of profit. And if you want to sell your business one day, it will be a very, very compelling opportunity for someone. And then the last one is what I call values, behaviours and standards. So if the operating model is what you do, the how you do it, is these values, these standards, and these behaviours often called culture.

And I see this as the glue that keeps everything together because you may have a great strategy, you may have a great product, you may have a really clear way of delivering that product through your operating model. But,  if you haven't got people who align up with the right behaviours, the right values, they show up, they take risks, they produce for you above and beyond what is expected, then all of a sudden, all the things that are happening in your business can be just a little bit flat, a little bit blank. And then what tends to happen is, that can become a bit of a disease in its own right and all the stuff that you have done to really build your business and get it to this level can be compromised simply because you haven't really thought enough about the culture with intention.

So they're the key things. There are six or seven different principles there, of what I call, the growth foundation principles, but these are the characteristics of companies that are highly valuable, are fast-growing and certainly something that you should be trying to strive for as you grow and scale your business.