Innovation and entrepreneurship in the Australian food and agriculture sector are key to solving some of the big challenges we face from the perspectives of growth and sustainability, on a global level. Australia is a world leader in growing, researching, developing and manufacturing foods that are high quality products. Local start-ups are faced with many challenges on a daily basis such as value proposition, minimum viable product development, customer validation, marketing, cashflow and commercialisation.
Below are 5 key growth drivers that start-up companies should consider when developing their own growth strategy.
1. Establishing Market Need
All entrepreneurs start with an idea, but not all ideas are good ones. There are a variety of factors that make a start-up successful and the first step that everyone must address is establishing market need. Entrepreneurs should only start companies when they have identified an attractive market opportunity where they can win, because they are disrupting an existing industry, tapping into several consumer trends that are happening at the same time, and have the ability and resources to gain market share. Successful start-ups get customers to try the product and they do considerable market research before they launch. That means talking to people who are their most likely customers, to get an in-depth understanding of what they need. A great example of this is the team at Hello Hemp; they have successfully launched niche products and have positioned themselves as the market leader.
2. Market Segmentation
Successful entrepreneurs understand market segmentation. This involves dividing a target market into subsets of consumers, businesses, or countries who have, or are perceived to have, common needs, interests and priorities. The next step is about designing and implementing strategies that target each of these market segments. This gives the sales team added clarity and focus.
Successful companies are good at identifying their unique product offering and their corner of the market. They then proceed to implement strategies to own that space and become the market leader. Following this, they use market penetration, market development and alternative channels to target their customers.
One company that has used the strategy of market segmentation extremely successfully is Cocofrio. Cocofrio is known for its all-natural, dairy-free and gluten-free ice cream. It is made in Melbourne with coconut milk and other organic ingredients and was the first Fodmap certified ice cream in the world. It tailors its unique product to suit the target market.
3. Leveraging Partnerships and Alliances
Establishing partnerships or alliances is also an innovative and cost-effective way to develop new business by leveraging off other organisations’ innovation, credibility and customer base. This enables business to gain a competitive advantage through access to a partner's resources including markets, intelligence, technologies, capital and people.
Teaming up with others adds complementary resources and capabilities, enabling partner organisations to grow and expand more quickly and efficiently. In particular, fast growing companies rely heavily on alliances and their network to extend their technical and operational resources. In the process, they save time and boost productivity by not having to develop everything on their own from scratch. They are thus freed up to concentrate on innovation and their core business. Successful entrepreneurs are also aware that they cannot do it by themselves, so behind the idea, team is the next biggest thing; one needs to put together a world class team.
4. Digital Strategy
In this digital age, a company’s digital brand is how most consumers experience their first impression of that company. A digital marketing strategy can help analyse how a business is currently functioning and help to build a roadmap of where they want to go. Strategy will also help understanding of the business’ strengths, weaknesses, opportunities and threats. Also known as the beloved SWOT analysis, this ‘oldie but goldie’ is a tool that is invaluable to understand what context the business is currently operating in and the possible factors that can either propel or hinder its success.
Looking at your business objective, consider the following questions. Who do you want to be as a brand? How will you stand out in a crowd and reach your target market? What is your brand strategy? When will you implement your PR campaign and leverage social media advertising? How will you build your audience?
These are all important questions and the answers can be the very thing that enables success or failure. A marketing strategy not only helps to organise thoughts, it can lead to reflection and insights. Dare to think big and be different!
5. Cash
One of the most important things in business is “cash flow”; without it a business cannot be sustained and is even less likely to grow. Cash flow from operating activities shows revenue, less payments to suppliers and employees, and other expenses. It shows what cash the business is generating. A company needs positive cash flow to be able to fund annual capital expenditure needs, interest costs and business expansion.
Fast growing companies understand that positive cash flow is critical especially if they have aggressive growth plans. They need the cash to help meet their commitments, otherwise they have to keep going back to their bank for more debt or to their shareholders for new equity.
Successful business owners know that growth strategies are never implemented in a vacuum. Companies need to be able to adapt and change to market conditions in response to feedback from customers, and market trends are as important as implementing the strategy. The business needs to continually improve, to stay ahead of the competition.
Stuart Haines is the Managing Director of Haines Consulting Group. Haines Consulting group is a management consultancy firm specialising in business growth, strategy, marketing, start-ups and new venture development. www.hainesconsultinggroup.com.au