Have you ever wondered what high growth firms do differently which allows them to achieve their growth rates? Some do it by acquisitions, others do it by rapidly scaling their operations and some do it through replication.
Each path has its own challenges and is not for everyone, but we can learn from the techniques they use and perhaps use some of this to drive additional growth in our own business.
Replication is perhaps the easiest of these strategies to apply and can be applied in many different functions within a business. Whether it is having several people undertake the same task, multiple salespeople working different territories or duplicating the business in another geography, the principal is the same. From a growth perspective what we need to focus on is doing more of what we do well. That is, instead of growth by diversification we should look to growth by replication.
If we are fortunate to have carved out a niche market which gives us a sustainable competitive advantage and produces very profitable results, we should seek to capitalise on that advantage. Too many businesses grow by taking on more products, different problems or new markets without appreciating the benefits which flow from a tight market focus and the learning curve advantages which come with that. In addition, every new facet which is embarked upon brings new risks.
Franchising is the ultimate example of replication. The business model of the local franchise is repeated over and over again. The internal systems are finetuned and standardised so that quality is assured. A number of functions, such as marketing, training and site selection, are done centrally to gain economies of scale. However, only certain types of products and services lend themselves to a franchising model. But the concepts associated with standardisation can be applied to any business replication.
We sometimes forget that a winning combination can be applied overseas. If you have managed to carve out a niche market in your own geography, the same problems and types of customers are likely to exist in many other places in the world.
Rather than take on something new in your current location, why not simply do what you do very well somewhere else. If you have a strong competitive advantage in your home territory, chances are the same advantages will exist in other locations. Take the time to review different markets to see if the same competitive advantage will apply. Even if you work through distributors or agents, the product or services advantages may still work for you. You can then expand using other peoples' money!
If you want to drive growth, you need to find paths which have the least resistance. There are a lot of strategies you can use but you should stick to the ones which have the highest probability of working for you.
Some firms are very successful at acquisitions, although most seem to fail at this activity. Others are very good at growing by building a wide product portfolio but this usually works only if they have a large customer base. Most businesses are better at working out what they do best and doing more of it. It doesn't sound very creative but it does work.
Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.
