4 Steps for Building a Business Growth Strategy
Developing a growth strategy for your business is often easier said than done—but it’s critical for anyone looking to successfully scale their business. When done right, a well-planned and executed growth strategy can lead to sustainable growth, increased profitability, and long-term success for the digital agency.
We share recommended steps for building an effective growth strategy below!
Table of Contents
- The Importance of a Business Growth Strategy
- Types of Business Growth Strategy
- Understanding Your Starting Point
- Growth Strategies in Strategic Management: 4 Steps for Success
- How Parallax Can Support Your Growth
The Importance of a Business Growth Strategy
Every digital services company has established operations to track various aspects of its business, including people, projects, sales, and revenue. The way in which they track these functions is crucial, as it shapes strategic decisions.
However, many companies today struggle with disconnected tools and data streams, making it time-consuming to get a holistic view of the business. This can result in misaligned perspectives on the true state of things and what it’ll take to scale the company.
When this happens, decisions become reactive and driven by emotion, often leading to friction and inconsistency amongst the leadership team, which eventually trickles down to the front lines. Employees start to feel overwhelmed with too much work (or too little work) and may start to question the availability of resources and their future at the company. To break this cycle, leaders need an effective growth strategy that’s informed by a unified, data-driven approach to decision-making.When done right, it should serve as a roadmap for business expansion, help solve resource optimization challenges, enhance the company’s competitive advantage, support talent acquisition and retention efforts, and drive consistent, steady outcomes.
Types of Business Growth Strategy
How exactly do digital agency leaders go about growing their businesses? Or, when navigating economic uncertainty, how can they stabilize operations and maintain the headcount they currently have? There are many different strategies that agencies can deploy today—it all depends on their unique business goals and the talent and resources they have to support them.
Here are some common growth strategies:
- Market Penetration: Involves focusing on existing markets and increasing market share by targeting new customers or expanding services to existing customers.
- Market Expansion: Focuses on entering new markets or geographic regions to expand the agency’s customer base.
- Diversification: Involves expanding the agency’s offerings by diversifying into new services or industries, such as complementary services that align with their expertise.
- Innovation: Centers around developing new and innovative services, solutions, or technologies to stay ahead of the competition and meet changing customer needs.
- Strategic Partnerships and Collaborations: Involves forming partnerships or collaborations with other companies to leverage each other’s strengths and capabilities to create mutually beneficial opportunities for growth.
- Acquisition or Merger: Intended to acquire or merge with other companies to accelerate growth and gain synergies.
- International Expansion: Involves expanding the agency’s operations into international markets and tapping into new revenue streams by establishing a presence in foreign countries.
It’s important to prioritize and focus on the most impactful strategies that align with the agency’s strengths and opportunities. Whether you’re just getting started or already have a plan in place that needs some updating, connect with your leadership team and ensure everyone is on the same page about the type of growth strategy (or stabilizing strategy!) you’re working towards.
Understanding Your Starting Point
The Three Horizons Model, developed by McKinsey, is a framework that helps businesses balance their current performance with future growth opportunities. It helps companies understand their starting point and serves as a guiding principle for agencies to achieve profitability while also fostering innovation—and we’re into it. 🤙
- Horizon 1 represents the bread-and-butter work of a company, mainly involving the work that the company is proficient at and can deliver on a repeatable basis. The goal of Horizon 1 is to maximize profitability and extend the lifespan of the work. However, Horizon 1 work eventually reaches a plateau in value as it becomes commoditized. The cost of doing the work increases, but clients may not be willing to pay higher prices.
- Horizon 2 represents innovative work that a company develops to predict future client needs. It may not be as profitable as Horizon 1 work, but it’s growing in demand. Companies need to constantly think about innovation and invest in developing capabilities to support Horizon 2 work, which will eventually become Horizon 1 work, creating a continuous cycle of innovation and adaptation to stay relevant.
- Horizon 3 represents futuristic trend-setting work that identifies upcoming industry and macro trends. Take the sudden rise of AI tools like ChatGPT—even as we’re still learning exactly how they work, various conversational AI solutions have been adopted in droves in only a few short months by shops, agencies, and companies of all shapes and sizes to save time and expedite certain workflows. While not all companies have the time or the option to focus on Horizon 3 work, having an overall understanding and vision for the future of the industry is important to consider at some level.
Ultimately, McKinsey’s Three Horizons Model framework emphasizes the need to constantly adapt and invest in future growth opportunities while managing current performance. If you’re interested in learning more on this framework, we dive in deeper here.
Growth Strategies in Strategic Management: 4 Steps for Success
Keep in mind that developing a growth strategy takes time. It takes patience and collaboration. It requires a clear vision. It requires dedication to that vision. And while there are many ways to go about pulling together a growth strategy, you should definitely be completing these four steps:
1. Set Growth Goals & KPIs
Setting growth goals is crucial for digital agencies to ensure continued success and competitiveness in the rapidly evolving digital landscape. Moreover, growth goals provide a clear direction for the agency, motivate employees, and help measure progress.
Consider following the “SMART” approach for setting goals; keep them Specific, Measurable, Achievable, Relevant, and Time-bound. This helps ensure your goals are clearly defined, quantifiable, realistic, and aligned with the agency’s overall strategy. Leaders should also consider the agency’s current capabilities, resources, and market conditions when setting growth goals—these factors all play a role in the achievability of goals.
Making goals a little more actionable involves aligning on and setting Key Performance Indicators (KPIs), which are metrics used to measure progress toward achieving growth goals. Think: revenue growth, client acquisition, retention rate, average revenue per client, employee utilization and project margins (👈these two are very important!), customer satisfaction, and more.
2. Develop a Growth Plan
Developing an actual growth plan is a critical step for any digital agency leader. This involves outlining a roadmap for achieving growth goals, guided by their KPIs, and it should be communicated to the appropriate stakeholders.
A well-structured growth plan provides a clear direction, sets expectations, and guides the agency’s efforts toward achieving its growth objectives. If yours doesn’t do this, it might be time to revisit it. 👀
By now, you’ve already aligned on the type of growth strategy (or strategies!) you want to deploy and the goals and KPIs that you need to achieve. Both of these should be accounted for in the plan, along with actionable steps that are required to implement the strategy. These steps should be specific, time-bound, and assigned to responsible individuals or teams. It’s essential to provide clear guidance on what needs to be done, when it needs to be done, and who is responsible for each task. This ensures accountability and ownership among team members.
3. Always-on Resource Planning, Capacity Planning & Forecasting
It’s (obviously) incredibly important that your agency has the necessary resources to implement the growth strategies and achieve the defined goals you’ve mapped out. You need to determine, then, the resources required to execute the growth plan effectively (including financial resources, human resources, technology, and other necessary tools or assets). This process is called capacity planning, which involves estimating the resources needed to meet future demand.
To help with capacity planning, you need accurate data that provides a comprehensive understanding of your business landscape, helps you anticipate future challenges, and allows you to strike a balance between business objectives and employee needs.
Data-driven insights also enable more strategic planning and forecasting, leading to improved performance and streamlined operations. These insights serve as a foundation for informed decision-making, enabling companies to optimize their performance and drive sustainable growth.
Luckily, with a resource planning, capacity planning, and strategic forecasting tool like Parallax, leaders are better set up with real-time forecasting and resource planning insights that allow them to understand how they’re performing on a variety of financial and operational metrics and what to anticipate—and, of course, how to pivot to achieve outcomes as needed. 🤜🤛
4. Monitor and Review
This could likely go without saying, but it’s absolutely essential to regularly monitor and review the progress of the growth plan against the defined goals and KPIs. This allows for timely adjustments, optimization, and course corrections as needed.
Review the plan periodically with the team and make adjustments as necessary to ensure it remains relevant and effective. Growth plans are not “set it and forget it” plans—they’re working documents and should be treated as such.
How Parallax Can Support Your Growth
How do we, Parallax, support growth strategies in strategic management?
Parallax is a purpose-built platform for service companies, developed by a team of industry experts who understand the challenges of resource planning, capacity planning, and forecasting. The platform is designed to help you understand how your current organization is set up for the services you’re offering and delivering today vs. how those might change in the future. It provides a clear perspective on exactly how service demand is changing—and how the available resources and capacity align (or misalign) with those changes.
Plus, with native integrations for existing, valuable tools, the platform minimizes disruptions to current workflows while providing a forward-looking view into the business that benefits everyone from leadership and finance to resource planners and project managers.
Our goal is to empower leaders to focus on strategic initiatives and drive growth, and our platform is designed as such. 🤝
Get a Free Demo of Parallax Today
The importance of having a tangible growth plan cannot be overstated. It serves as a roadmap for your agency and helps align your team toward a common vision, ensuring that efforts are focused on strategic priorities.
Remember that a well-structured growth plan helps in assigning accountability and ownership, tracking progress, and making data-driven decisions as well. It should be as a reference document that can be communicated to stakeholders, and it should create a systematic approach to achieving goals and helping the agency stay on track.
Still curious how Parallax fits into the equation? Have questions about goals and KPIs or what a growth plan actually looks like? We’re always happy to chat further: https://www.getparallax.com/book-a-demo.