Beyond Start UP - Growth Strategies for SMEs

Growth Strategies for SMEs

Q.Aspen | Consulting & Venture Development 2

Michael Olorunninwo currently does operations strategy and planning at Seven

Energy Nigeria. He previously worked as Management Consultant at KPMG and as

Aviation Risk Underwriter at NICON Insurance Plc. His experience cuts across

Business Development, Corporate Strategy, Financial Management, Human

Resources and Operations (Business Process) Improvement. He has consulted for

companies in Consumer Markets, Energy, Financial Services, and Hi-Tech.

Michael is also co-founder/project lead at Q.Aspen, a consulting and venture

development social enterprise focused on developing hi-potential SME opportunities.

Q.Aspen’s mission is to build successful indigenous African businesses of the next

century.

Speaker Bio

Q.Aspen | Consulting & Venture Development

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Welcome…

…now that you’re no longer a start-up;

What next!?!


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You Need a Growth Strategy!


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What is…?

The process of

increasing in size

Growth

What is a Growth Strategy?


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Growth Dimensions/Parameters

Increase in Employees?

More Capital Investment?

More Office Locations?


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Growth is all about…

An advantage that a business has over its competitors

which allows it to generate greater sales or margins and

retain more customers than its competition

…Competitive Advantage!

Cost Structure Product Offerings Distribution Network

Locked-In Customers


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Sources of Competitive Advantage

Product-Features

Procedures

Quality

Employees

Customer-Experience

Customer Incentives

Goodwill Value-Add

Alliances

Low Price

Branding

Location

Differentiation

Low Cost Distribution Network Strategic-Assets

Exclusive Rights Barriers to Entry Cash-Flow

Access to Funding Strong-Management Data-Management

Speed High Volume Production Innovation


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Cost Ability to produce goods and services at a lower opportunity

cost than competitors

Type of Competitive Advantage

Ability of products and services of unique features, benefits,

characteristics and better quality than competitors

Think Value Proposition!

Differentiation


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Understand Yourself & Your Business


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What You Need? Resources & Capabilities

Company specific assets useful for

creating advantage

Ability to utilise resources

effectively


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What You Need? Resources and Capabilities

Ability to run successful larger scale operations. Helps to

build efficiency and economies of scale

Assets held by company to achieve competitive advantage

e.g. Patents, Branding, Customer Base, Human Resources

Skills required to lead and manage growth

e.g. new product development, finance, M&A, local expertise

Operational Skills

Privileged Assets

Growth Skills

Relationships not available to competitors

e.g. Trade Union, Government, Foreign Alliance, Franchise Special Relationships


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Understand Your Industry


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Understand Economic Trends (Nigeria)

High economic growth rate

– Nigeria’s economic growth has averaged about 7.4% annually over the past decade

– Growth remained robust in 2011 at 6.9%, driven by the non-oil sector; average of 7% to 2015

Exponential population growth

– Population about 158 million, represents large consumer market (72% of population < 30 years)

– Excellent regional distribution of eight “anchor” cities, each with populations exceeding one million

Urbanization and the rise of the middle income earner

– About 74.2 million Nigerians currently live in urban areas, with urbanization progressing at ~3.5%

– By 2020 more than 70% of Nigerians are projected to live in cities

– Growth of emerging middle income earners/consumers with higher disposable income

Encouraging environment for foreign investment

– High recipient of FDI in Africa

– Ranked 170th on “Ease of Doing Business Index,” strategic moves by government encourage FDI

– New industries can obtain pioneer status granting tax exemptions for first 3-5 years


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Understand Your Target Market

Pick sub-set of entire marketplace that you can organize

your sales efforts around

Market Segmentation

Whom are you better off selling to or avoiding?


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You can segment by:

• Geographical Location

• Income Bracket

• Age Group

• Occupation

• Social Interest

• Preference


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Loyalty to Brand

Perceived quality

of products

Perceived value

relative to price

Not necessarily

drawn to a

manufacturer

Religious

90% of Nigerians

confess to a form

of religion

Consumers are

influenced by

religious practices

Point of mass

convergence

Price Sensitive

Mostly price sensitive

New innovations revolve around

small packaging of consumables

Discount retail stores moving

demand from informal retail

Luxury product market also

booming (middle class growth?)

Consumer Retail Spending Patterns, 2015 estimates


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Understand & Reinvent Your Product

Customer Pains

Your products should be a Pain Reliever or Gain Creator or both

Customer Gains

Customer Jobs

Product Traits

Pain Relievers

Gain Creators


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Understand & Reinvent Your Business Model

How Does

Your

Business

Create,

Deliver

and

Extract

value?


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Understand & Reinvent Your Business Model


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What Do You Want to Do?


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Strategy is all-encompassing

Production

Marketing

Human Resources

Customer Service

Finance & Accounts

Procurement

Logistics

Info Technology

R&D

Legal


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Generic Growth Strategies

To move from insurgent to incumbent,

you need to create a repeatable model that shuns

‘best-practices,’ and delivers scalability

Repeatable Business Model


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Inbound

Logistics

Savvy Partnerships

Identify your comparative advantage

Outsource? Insource? Create Alliances?

Production Outbound

Logistics

Marketing &

Sales

Customer

Service

Focus more energy on building

longer term competitive advantage!


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“If this business were split up, I

would give you the land and bricks

and mortar, and I would take the

brands and trademarks, and I would

fare better than you.”

- John Stuart, former CEO of Quaker Oats

Effective Branding

Ch

ap

man

N100 N2,000


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Brand Message A phrase that makes your customers believe you are the only

one with a solution to their unique problem

Short phrase that emotionally connects with your target market

and communicates the most important benefits of your product

If you need to be one thing in your customers’ mind,

what would it be?

Think different! Ultimate Driving

Machine

Always Low

Prices!



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Gillette continually creates new, improved razors better

than competition: from coated stainless blades, to

revolutionary Sensor, and now Sensor Excel. Gillette also built

on its razor brand to add grooming products - aftershave,

deodorant, and shaving creams.

Continuous Innovation

Think Brand Leveraging


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Before 1995, Indian domestic denim (jeans) sales was limited as jeans were unavailable

and expensive at $20 to $40 a pair, beyond the reach of mass market and existing

distribution systems reached too few towns and villages.

Arvind introduced Ruf and Tuf—a ready-to-stitch kit of jeans components (denim, zip,

rivets, leather brand patch) priced at about $6. It distributed them through 4,000 tailors,

whose self-interest motivated them to market the kits to create demand for sewing

services. Ruf and Tuf are now the largest- selling jeans in India by far, driving sales in

Arvind's main product, denim, and netting the company a potentially powerful consumer

brand.

Improved Delivery Channels

Build new ways to serve customers more efficiently & effectively?


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Yes! Build checklists for every job within your business

Build Processes

Your customers will love your efficient service –

key to repeat purchases and referrals


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New Geography


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What to Expect…

Hiccups!


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Set Goals

…and measure your progress periodically.

Celebrate performance!

Key Initiatives/Actions Key Implementation Steps

Implementation

Key Enablers KPIs Responsibility Due Date

Human Resources


Loss of personal focus on cost and risk management, leading to rising

costs and unnecessary risks

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What to Avoid Becoming…

Founder unable to adapt his or her behavior as company evolves,

founder issues disrupt leadership agenda

Focus shifts towards internal issues, voice of customer fades from

decision making and frontline employee is forgotten

Being The Un-scalable

Founder

Loosing Voices of the

Front Line

Unaccountability

Company drifts towards flawed systems, institutionalizing core

capabilities backfires, resulting in bureaucracy and exodus of talent

Revenue Grows Faster

Than Talent


Final Words

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Strategy is about making choices,

and trade-offs; it’s about deliberately

choosing to be different Michael Porter

A satisfied customer is the best business

strategy of all. Michael LeBoeuf

Q.Aspen | Consulting & Venture Development 35

Michael Olorunninwo | @inspiregr8tness | +234 808 718 5748 | [email protected]