To: Growth plateau-ers
Fr: Max Kabat, Co-Founder/Growth Strategist, goodDog
Subject: Don’t panic. It’s just a growth plateau.
Do the days that it all feels like a slog outweigh the smooth sailing ones? Is something amiss that you can’t quite put your finger on it? Close your eyes. No, I’m not pushing a meditation practice on you. I want you to imagine yourself in some muck boots. Tall ones. Now look around. You’re in the middle of a huge bog. It’s wet and uncomfortable. The ground is grabbing at your feet. You’re not 100% sure how you got here and you're not 100% sure what the best way to get you out is.
If this feels like an analogy for you and your business, then you’re a bit stuck. Sure, it’s daunting. But there’s usually a discernable reason you are stuck: capacity, vision, cohesion, focus. But don’t feel bad. no matter what “they” say on LinkedIn, growth isn’t a straight line for anyone. Welcome to your current growth plateau. So put on your boots and start the long walk through.
After working with dozens of clients to help them navigate the unique challenges of this inevitable inflexion point, we’ve learned a thing or a hundred about the best way to meet your next financial goals without losing your soul. Or your shirt.
1. The consumer: Wait, who are we selling to?
PROBLEM: You’ve invested in evolved packaging and have come out with products for a bigger audience. You’ve cast a super-sized net only to realize that, for your stage of growth, it's making you far too inefficient. You’ve spent so much time growing the business and fending off the increased competition that your team can’t remember who your customer is. Leadership says they know, but all that information is in their heads. You have five different target markets so even though you’re trying to love all your consumers, you're not feeling the love back.
SOLUTION: If your run rate is $10 million or more, you have to spend money on data to learn more about your core consumer who got you here, and to locate a growth consumer for your next chapter. Say yes to category sales data and what’s available via your retail and online sales channels. And, say yes to creating your own. Quantitative research can help you understand attitude and usage, while qualitative research can help you go a layer deeper into the feels so you really understand why people buy–or don’t buy–brands like yours. Find out where they are and who they are, and go meet them there. Knowing your consumer will help you sell to them more effectively, pitch your products more meaningfully to retailers and innovate in the right direction.
2. The how: Constrained by capacity
PROBLEM: To scale at an exponentially fast rate, you have a choice to make: Do you leave the making of your product in the hands of co-manufacturers, or do you dedicate a large sum of capital toward making it yourself? Two different schools of thought–but, should you be successful, they both come with the eventuality of not having enough supply to meet demand. Waiting till you get that new big order is not the time to think about the future. And, yes, it could take a long time to rebuild the retailer relationships you burned by not delivering on time or those consumers that are still waiting for your product to get to their door.
SOLUTION: Should you take the co-manufacturer road, how do you frame that relationship as more of a partnership and less as a vendor one? How can you avoid bigger customers getting preferential treatment on the line? Is there a seat on your board available? Have you considered asking them if they wanted to be a part of your upcoming capital raise? Should you pursue the likes of vertical integration, do you have the right experience on your team—from operations leadership to board experience with the proper knowhow of running a plant? Is your organization set up to manage people as much as process? If it isn’t, before investing in building your own capacity, go get that experience. Ask for help and money before you’re out of space–and time.
3. The store: Big trade spends die hard
PROBLEM: You feel the pressure to grow. From investors. From employees. From buyers. From yourself. You say you don’t have enough of a marketing budget to be impactful so you allocate dollars towards trade with retailers to get more turns. But have you just achieved growth for growth's sake? Are you putting too much money into trade so it looks like you’re moving product, but all you’re doing is paying for it?
SOLUTION: Grow slower. I know. Crazy talk. But for every rocket ship that sold in the last year after only four years in business, there are hoards of successful brands building a long-term sustainable impact. Customer acquisition–in-store or online–is just plain expensive. So build, don’t buy, growth. We all can picture the BOGO warrior Halo Top’s recent ride. Care more about velocity and profitability rather than number of doors and one-time, or discount, customers. It will also suppress your need to push out more innovation because, newness, and just to keep the brand fresh.
So let’s do this. Building relationships with consumers, locating a growth consumer so you know in which direction you’re headed, making hard decisions about capacity and weaning yourself from trade spends are totally doable. Figure out what makes you special. Most importantly, figure out your "why." Build a culturally relevant, resonant, unimpeachable moat around this why. Now go ahead. Start wading through that bog. There’s wide open space on the other side. And you won’t need your boots.
Max Kabat is from goodDog, a brand consultancy that helps mostly mid-stage, founder-built, mission-driven companies grow by articulating a singular storyline then bringing it to market.