What is a growth engine?
A key element of your business model is the growth engine. Your start up needs a repeatable and predictable set of activities which will enable you to build customers and revenues - this is your growth engine. Your growth engine determines the processes you will adopt, your sales and marketing strategy and many of the staff you will hire. It also enables you to identify the best metrics for your business. Tracking these metrics and taking actions to improve them will become the core of your management model.
Are you ready for growth?
Start ups needs to scale and a powerful growth engine is an essential part of a scalable business model. Note that the growth engine only comes into focus at the right point in the development of a start up. Identifying and developing customers and establishing product/ market fit must come before you fire up your growth engine.
Every business will have a unique growth engine adapted specifically to your products, customers and users. Different business models have growth engines with different core characteristics. For example B2B is different from B2C, SaaS is different from usage based revenue and so on. But we can identify the core common components.
The 4 cylinders
Your growth engine has 4 cylinders:
Do not view this as a linear process. Like a real engine, each of the four cylinders needs to fire in unison to generate real power. It is common to to find start ups who can make one or two of the 4 elements work - acquire customers easily perhaps or make find a price where the customers they do have would be very profitable if only they had enough. True growth only happens when all four elements are working well.
Measure, Measure, Measure
Measurement is the vital element to make the growth engine work. Analytics have come a long way and we are now able to precisely track user behaviour and action in real time. Measure to understand how your product is used and build patterns of user behaviour. These numbers drive the heart of your business in 3 ways:
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Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.