Investing in Your Company’s Development

You know your company has growth potential but you’re not sure how to best make this happen.

Invest 1
Diagram 1

Your instincts may well be to ramp up your sales and marketing – after all more sales gives growth.

Here’s another way of thinking about this.  Our diagram opposite shows the profile of a typical sustainable growth company.  We’ve arranged this as an arrowhead  (Diagram 1) as a metaphor for where the company’s going:

  • You can see typical expenditure levels against annual Sales allow for a surplus cash flow and thus the ability for you to continue investing in Development;
  • Companies who use this profile well can expect to grow from 10-20% annually;
  • Development, shaped by Governance and Management guides the way the company travels into the future;
  • So the first areas to focus on are where you want to get to – and, what well-executed Development is required.

Let’s now dissect Development(Diagram 2).

There are thus two key issues:

  1. How well the Development is planned to effectively invest up to 10% of annual Sales into supporting sustainable growth;;Invest2
  2. And, then how well Development is executed.

Key factors for the first are: (Diagram 3)

  • Understanding the gap between where you are and where you want to get
    - ie; ensuring it fits with your view of the future;
  • Identifying new business opportunities (including for existi
    ng products and services) – because existing business almost always declines over time;
  • Validating these to make sure they will make sense in the market and add value to the company –ie; customers actually want them;
  • Ensuring that chosen developments are within your competence – ie; you’re not going to make a mess of it.Invest3

At a very simple level, this is like reading the exam questions carefully before you start answering them.  It saves a lot of confusion and pain later on.

 

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