The Challenges of Achieving Growth and Increasing Business ...d3hip0cp28w2tg.cloudfront.net/.../2014-12/graham-godfrey-1.pdf · The Challenges of Achieving Growth and Increasing Business

The Challenges of Achieving Growth and Increasing Business Value

Eur Ing Graham Godfrey

Graham Godfrey Consultancy Food Matters Live November 2014

Why do we want to “grow” a business?

• To sell more product

• To make more money

• To introduce new products and broaden the product range

• To make the brand better known

• To obtain wider distribution

• To increase the value of the business

19/11/2014 Graham Godfrey Consulting - Confidential 2

If you don’t have a strategy for growth, your competitors certainly will and that will reduce your market share, sales value and profitability

Your business will stagnate and will ultimately loose value

Growth, even slow growth, is therefore of prime importance


Planning for Growth

• Know your market – What market are you actually in – “food” fills many

niches – gifting, satisfying, entertaining, refreshment, nutrition, energy and many more

• Know your customer and consumer – Communication is the key, find ways to know who

they are, what they think, what they want

• Know your competitors – Don’t ignore them, try to work out what they are

planning and have a strategy to win


Growth • Growth of a business is about increasing its value not

just increasing short term profit, and includes:- – Constantly improving market position

– Innovation and investment in the future

– Customer and consumer image

– High efficiency/low waste operations, low costs

– Control of resources for operation (ingredients, energy, etc.)

– Financial stability, solid cash flow and profitability

A company with a sound business base and reasonable profitability will always have a higher value than one with

apparent high profits and no prospects


Planning for Growth

• Build a strategy around your core strengths:- – Improve consumer value and perception, invest in

the market

– Excite the consumer with new products and ideas

– Increase market penetration and distribution

– Reduce manufacturing and ingredient costs without compromising quality and stabilise resource supplies

– Improve customer service

– Strengthen the brand


Build Commercial Advantage

“In the lead and pulling ahead”

• Commercial advantage can come from many different aspects of a business, it is about exploiting and building on genuine strengths

• It gives you the opportunity to increase the value of your business at the expense of competitors

• Regularly review your competitive position


What can hold back SME’s ?

• Lack of Innovative thinking

– Innovation and quick thinking should be at the heart of any SME. Innovation was probably what got you started, don’t loose it

• Incomplete skill sets

– To thrive a business needs technical, innovative and business skills. It may not need all of these all of the time, but it does need access to all of them for the business to be properly “rounded”


• Living in a Bubble

– Running a small enterprise is very hard work and it is easy to become internally focussed. The “outside world” provides you with your return, don’t ignore it.

• Resistance to change

– A small business must always be in a state of change – it is one of it’s key advantages. Embrace change – become a “professional upsetter of apple carts”


• Quality

– Understand what the consumer perceives as quality

– Never think that reducing quality will be beneficial

– Quality is what sells – it generates “word of mouth” new consumers and brings old ones back. Aim to continuously improve quality and surprise the consumer each time they buy in the best way.

– Improving efficiency always improves quality

“If you make a quality product, you don’t have to sell it, people will buy it off you..”

Ray Sellers, Chairman Cadbury Ireland, 1980


• Understand Value

– Consumers search for value consciously and unconsciously

– It is an important element of the buying decision

– Understand what the consumer sees as value in your product, it may not always be something tangible like size or weight

– Ensure that maintaining and increasing value is part of your strategy


• Ingredients

– There is a lack of certainty in the price, supply and quality of many key ingredients. The global contracts concluded between major users and suppliers gives them significant price and supply advantages over smaller businesses.

– Ingredients are a potential key difficulty for SMEs in the future, you need to secure and understand the upstream supply chain of your business


• Failure to “Sweat the assets” manufacture efficiently, minimise cost and waste – Make the maximum use of all the assets you have, not

just operational ones, but all the less tangible ones such as IP as well.

– Be ruthless and ever vigilant about manufacturing and ingredient costs and waste

– Ensure that marketing and promotional spend is effective

– “Right first time, every time” must be the clear philosophy throughout the business in all areas and at all levels

– If your business can’t make full use of its assets, try to find a partnership which will do so


• Failure to communicate with the consumer

– Modern social media resources allow you to communicate easily and effectively with the consumer and customer.

– Make use of this to understand who they are, what they think of the product, what they want in the future, what they think of you

– Use of a carefully selected professional may be beneficial unless you are confident yourself

Genuinely listen, don’t try to distort information to reinforce your own opinions


• New Product Development

– You have a couple of successful products – why use resources to develop new ones?

New products introduce innovation and excitement into the market and drive growth and value

– Your competitors will introduce new products and potentially take market share. You must have a new product plan, you cannot afford to stand still

– New entrants into the market are equally challenging to you, you fight them through equalling their excitement and novelty value


New Products Development is therefore extremely important, however:-

– Products must fit your growth strategy and appeal to today’s consumers and lifestyles

– NPD takes time and is much more effective if it is part of an ongoing strategy – there is nothing more guaranteed to fail than a “rush job” in response to competitor or market challenge

– You should use your resources to promote exciting new products which will provide your company with growth, not to support products which are old and possibly failing


Failure

• You can be certain that not everything will go to plan, failure is a fact of life

• Admitting something has failed is extremely difficult for most people but is actually very important

• There is always a temptation to “give it another week” or “a few more thousand should fix it”

This is rarely, if ever, successful and just wastes precious resources


• Recognising and dealing with ideas which fail is just as important as recognising success

• Try to have clear criteria for failure, but if this is not possible don’t be afraid to trust your instincts

• If something is clearly going to fail then stop wasting resources on it immediately

• You may have to plan for arguments, particularly if it’s the MD’s pet project!

• More junior staff will need support and to be convinced that it is the idea, not they, who have failed


Learning from Failure • You potentially learn at least as much from failure

as you do from success

• Don’t just abandon an idea which has failed, try to understand why it failed

• Use what you have learned to reduce the chances of a similar failure in the future

• Do not let one failure result in a “risk avoidance” or “blame based” culture

• Do not let one mistake or failure demotivate an individual or group, try to make it motivate them to future success


Failure is not something to be afraid of but it is something to be managed properly

The only people who never fail are those who never create anything

Fear of failure can and does paralyse businesses. The only thing to be afraid of is not recognising and managing failure properly and

above all not learning from it


Conclusions

• SMEs in the food industry cannot survive without a strategy for growth and change

• There are many challenges but by acknowledging them you are already on the road to meeting them

• Innovation and rapid response to change in the market are key weapons and must be part of every day thinking


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The Challenges of Achieving Growth and Increasing Business ...d3hip0cp28w2tg.cloudfront.net/.../2014-12/graham-godfrey-1.pdf · The Challenges of Achieving Growth and Increasing Business