Have you finally gotten to a place where things are going well in your business? Take a moment to give yourself a pat on the back. While it’s great to celebrate your wins, that doesn’t mean you should get comfortable. No matter how well things are going, you always want to be thinking about how you can do even better in the future.
After your products and services start making a profit, it’s time to set the stage for business growth. But while growth is fundamental for the sustainability of a business venture, it’s also not always easy to achieve.
According to the US Small Business Association, only 66% of businesses manage to survive the first two years of operations. Meanwhile, 50% make it to five years and 33% manage to survive for a decade.
To make your company’s growth both successful and sustainable, you need to have a concrete business growth strategy in place. In this blog, we’ll be talking about 5 simple strategies that will not only help your business flourish. Let’s get started!
A business growth strategy is a plan of action that lets you create new opportunities, bring in more customers, and generate greater profits for your company. It helps you determine how your small business is going to evolve and expand to scale.
Furthermore, it helps you determine how you’re going to address challenges in the future while giving your company a sense of purpose.
Often, business growth strategies are anchored on the opportunities in your market. Ultimately, it gives you a competitive advantage because it helps you focus on forward-facing goals and opportunities that your competition may not be seeing right now.
A well-crafted business growth strategy aims to increase the size of your business in a sustainable and scalable manner. Before you can decide on a strategy, however, there are certain pre-requisites you need to have at hand to position your company for growth.
To transform your small business into a full-fledged and thriving large business, you need to:
The first step towards sustainable long-term growth for any business is knowing what sets you apart from the competition. What is it about the brand that makes customers choose you over other companies? Determine what special benefit only you can provide to your customers. You can then use this to explain to people why you’re the brand they should trust.
Many business owners went into business to solve a specific problem for a specific audience. Knowing who your ideal customer helps in keeping your business growth strategies laser-focused.
Certain performance indicators affect the growth of your business more than others. As a business owner, it pays to know which ones help propel your business forward.
When developing a business growth strategy, it’s important to know what your current and potential revenue streams are. Analyze these streams and determine whether or not they are sustainable.
It always pays to know what you’re up against in business. Look at similar businesses in your industry, see what they are excelling at, and determine why that’s working for them.
Knowing what you’re good at is an important aspect when you’re expanding a business. An effective business growth strategy plays up your strengths and guarantees better opportunities for your brand.
Successful businesses follow six core business growth strategies that help them stay ahead of the competition. These plans of action are what can get you from point A to point B in terms of business expansion. Remember that the risk and rewards for each of these strategies are directly proportional. The bigger the growth impact a strategy has, the more risk it carries.
Market penetration refers to the successful selling of a product or service in a specific market. It is often measured by the sales volume compared to the total target market for a specific product or service.
The goal here is to obtain a bigger market share than the competition. Typically, businesses do this by persuading new and existing customers to buy more as well as by converting customers from competitors.
Some implementation strategies for market penetration include:
This is anchored on the idea that customers gravitate towards lower-priced goods. To improve their market share, some companies prefer to price their products lower than their competition to persuade consumers to choose them over the competition.
Offering promotions and augmenting advertisements is another way to increase the market share of a business. This raises brand awareness which can then affect the overall sales of a company. For modern businesses, this often means boosting their digital marketing efforts across multiple platforms including social media, email, and pay-per-click ads.
Improving the quality of your product or service is a great way to out-sell your competitors. Sometimes, you don’t even have to reinvent your whole product to say that It’s “new and improved”. This is especially true for products that are declining in popularity. You can simply alter one aspect of a product to make it better or even just modify its packaging to be more appealing.
Market development involves identifying and developing new market segments for your products. It focuses on selling to non-buying customers in existing targeted segments as well as to new customers in entirely new segments.
In short, this business growth strategy pushes a company to compete in a market it had not captured before. This may include selling and promoting in new territories (new geographic segments), attracting non-buyers into your current market (new demographic segments), or developing new uses for your product (new institutional segments).
When pursing market development as a business growth strategy, you need to have a strong understanding of your existing target audience and your existing market. This allows you to identify areas where you can effectively branch out and develop new marketing strategies to help you win over your new target segment.
A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the final buyer or the end consumer. Distribution channels can include wholesalers, retailers, distributors, and even the Internet.
Using a wide range of distribution channels can contribute to sales volume while building brand awareness. This strategy is especially useful for businesses selling physical products. The most common distribution channels you can focus on include:
This distribution channel lets you sell your product on your own either through a brick and mortar or through a web store)
This channel involved using third-party outlets to bring the product to market.
With this channel, you are selling products in as many outlets as possible.
This channel involves creating an in-store experience for consumers. You sell through select retailers to retain exclusivity and to appeal to consumers with discriminating tastes and preference.
This distribution channel involves partnering with a single wholesaler or retailer in a particular market. It restricts availability to protect brand equity)
Under this channel, use a variety of distribution channels to sell their products, working with wholesalers and retailers while also maintaining brand storefronts to sell directly.
With this channel, you sell your products to another business in bulk. This lets you move large volumes of products at once albeit at a reduced rate.
This distribution channel is best-suited for B2B companies. It allows business owners to create products with a strong core functionality. The VARs will then add features and services so they can sell it to other industries or market segments.
Also called product line extension, product expansion is a business growth strategy that involves expanding product lines or adding new features to existing products to appeal to your existing market.
At its core, it’s an approach that lets you boost your market share and increase customer loyalty while minimizing risk. By simply adding new features or altering certain aspects of your existing products, you can meet the changing needs of your target customers. You can also reduce the cost of product development while increasing opportunities for increases revenue.
This could be as simple as adding new colors to your current t-shirt range or making a low-calorie version of the snack you’re selling.
Sometimes the best way to grow a business is to team up with complementary, non-competitive business. This way, you can instantly gain access to new customer bases and markets you wouldn’t normally have access to.
For small businesses, this could mean venturing into mergers, acquisitions, or partnerships with other businesses. Under this growth strategy, you can open doors to better manpower, skillsets, knowledge, equipment and technology.
One caveat though is that you need to make sure that the arrangement you’re shooting for is beneficial for both parties. You need to have comprehensive legal contracts in place to protect your venture in the event of untoward circumstances.
For many businesses, the only way to go is up. But to do this, you need to have the right strategies in place. We hope the tips above will help you and your business reach greater heights.
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