The opinions expressed by Entrepreneur contributors are their own.
Will there be a recession? Are we in a recession? Even economists can't agree. Still, entrepreneurs are busy planning, predicting, and considering the future. There are countless decisions to make, but one of the most important is: What strategy will your company pursue this year: a year of growth or a year of status quo?
Since starting my PR agency in 2008, I've had a front row seat to high-growth companies – companies with ambitions to achieve high performance. CEOs of hyper-growth companies see the world differently. External conditions are considerations rather than driving forces. Because thriving companies know they'll always make it to the top, and they build their strategies around getting there.
When uncertainty clouds decision-making, there is great pressure to resort to cost cutting.
The reality is that it doesn't matter whether a recession is imminent or not. Regardless, companies in the same category will be number one in terms of revenue this year. If it were your company, it would be because you controlled what you could. Since 2008, I've seen thriving companies do these things with absolute clarity, regardless of economic conditions.
Related: 10 Growth Strategies Every Business Owner Should Know
Reinvest in line with growth
Ambitious companies know that cutting costs has never led to growth. It may be more profitable, but it's a different strategy. Growth strategies require investment.
Typically, people at the bean counter say things like, “Our salespeople make too much money'' or “This initiative won't directly lead to sales,'' but it's their job to point out these latent concerns.
But CEOs in high-growth periods know that companies in high-growth periods operate knowing that every dollar invested will have a return because they invest in the right places for growth. I am. When your ROI starts to plateau, you're in maintenance mode instead of growth mode.
Growing companies match investment with growth. They spend money on marketing, sales and PR. Because when you're growing, or when you want to grow, these are the levers you pull. The average company with $10 million to $25 million in revenue spends 15% of its revenue on marketing strategies. If you want to be average, there is a baseline. If you want to stay ahead of the curve, you'll need to stretch that budget, and that may mean giving up some profitability in the short term.
Growth-minded CEOs know that spending on growth is essential in the next phase, whether it's an IPO, acquisition, or capital injection. Everyone loves a winner. The goal is to become a winner in the eyes of those involved who will lead you to your end goal.
Related: Why you should reinvest half of your earnings back into your company
Strongly supports the sales process
It doesn't matter whether you sell to businesses or to consumers. Not all sales activities directly lead to sales.
It's continuous exposure and relationship building that leads to sales. In today's very crowded and highly competitive marketplace, relationships are the differentiator. According to the US Census Bureau, in the first half of 2023, there were 3.12 million business starts. This means that new business starts in 2023 are trending against historical averages. Starting a business has never been easier. Every business has competitors chasing after them. Currently, only 6% of companies have revenues over $1 million, so these companies are not yet competitors. But one of those companies that was founded three years ago is probably sneaking up on you and you don't know it yet.
Salespeople and sales channels need visibility and a reason to engage with potential buyers and start conversations. If every conversation starts with “We have a deal,” you're conditioning buyers to wait for a sale. It's not a winning tactic unless you can win the race to the bottom.
Large corporations and publicly traded companies often use this strategy. Sometimes this is the reason why a company wants his IPO, in order to secure the budget for the company to win this battle and become a dominant player. Once they own the market, they will be able to raise interest rates with impunity, at least for a while. Most mom-and-pop businesses can't win this war, so they need to be growth-oriented and remember to support the sales process.
Market positioning determines how you support your sales team and sales efforts. If you want to be No. 1, you need to be the most trusted and visible, so allocate your marketing budget with that in mind. If you're already the most trusted of your competitors, you might only spend 40% of your budget on trust-based initiatives like PR, in-person engagement, and events. If you're already well-known but aren't closing deals, investing in trust is essential. One of the reasons people invest in PR is because it provides both exposure and credibility. Trust is not an item on a spreadsheet, but it can be clearly seen in key performance indicators (KPIs).
Related: The levers of this growth strategy are right around the corner. Use it to double your company's success.
Track initiative-specific success metrics
Everyone tracks revenue and profitability. However, companies in growth mode track his KPIs that provide insight into trust and reach. Thriving companies value both their reach and their reputation.
Trust KPIs should be built steadily with significant year-over-year differences. When building a home, trust is the foundation.
Trust KPIs are:
- time to convert
- Direct access to website
- brand mention
- Brand associations (how trusted are the other brands you are associated with?)
- Revenue per new customer
- Return on advertising spend (ROAS)
Awareness KPIs are important because exposure is important. Returning to the house analogy, awareness KPIs provide a framework.
Awareness KPIs are:
- thoughts
- incoming lead
- Reach (ads, media mentions, social media)
CEOs looking for growth track these metrics over time. Growth is like a train, so long-term monitoring is essential. It will move slowly at first, but once it starts gaining momentum, it will grow faster, assuming you continue to encourage growth.
Ignoring external factors is an extreme idea, but that's exactly what CEOs of ambitious companies are doing to grow. Growth mode is not a way of life. Active growth is the way to the next step, during which some eggs are broken to make an omelet. But I find that CEOs invest in, measure, and stay on track for growth. He does it with concentration and focuses on controlling the elements that can be controlled.
