How Service Firms Can Grow Faster
(By Gil Gerretsen) Over the last decade, most investor and business media interest seem to have focused on two types of enterprises: early-stage startups and the elusive unicorns.
The early-stage startups, although lacking significant revenue, garner interest for what they might become. They often have an exciting idea spearheaded by an inspirational founder. The scarce unicorns may also not have much revenue or profit but build a measure of excitement about becoming the next big thing.
In the quiet middle are many companies who have managed to achieve growth and profits, and in many ways form the backbone of our economy. Almost completely forgotten are the large number of professional service firms who functionally “grease the skids” for the companies they support.
While startups and unicorns play a role in job creation and economic expansion, their historically high failure rate tends to be glazed over. The real economic engine sits in the businesses and associated service providers who have navigated the challenging early years, made it through one or more revenue plateaus, and grown into stable enterprises.
A few years ago, some research by Gallup and TrueSpace explored how companies that were no longer startups managed to successfully grow their revenues and employment without much attention from the investment and business media communities.
The researchers studied about 2,500 businesses with revenues under $10m who were at least three years old. Their findings indicated that their post-startup growth required the development of five key performance factors, as follows:
Alignment - Is the business capable of growth?
Discipline - Can the business scale?
Predictability - Are the decision-makers always learning?
Endurance - Can employees and other stakeholders endure the growth journey?
Value Creation - Is the business capable of growing in value?
The research found that the first four factors provided the best indication of future growth rates and company size. The capacity for growth and scalability were the most pertinent.
It is crucial to focus on building reliable revenue development systems to make the best use of finite resources.
Growth oriented businesses and service providers must have an innovative and competitive offer coupled with experienced talent valued by the target audience. The growth comes from consistently repeating the offer to potential customers who are, or become, highly receptive to the company’s distinctive point of view.
Operational efficiency, talent development, and marketing effectiveness were distinguishing indicators of top performers. These are the factors that fuel scalability. They require the businesses to look beyond their short-term concerns and invest in the development of capacity for continual process improvement, especially in the revenue development arena.
Further, the learning mindset is critical. A company’s leadership must keep building their skills so they can adapt continuously to the changing marketplace.
This is where the greatest opportunity arises for the professional service firms that support them.
Top leadership needs to have access to honest conversations and transparent information critical for decision making and building the company’s path forward. As they refine their market propositions and operational processes to adapt to customer feedback, their utilization of independently minded service providers gives them the capability to grow their business faster, easier, and with less risk.
For service firms to grow faster, they must exhibit to their clients a high level of engagement coupled with effective tools, resources, and dedication. When that message permeates their target community, then the service firm will also grow alongside their client community.
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