As small business owners, it is important to know what business growth really means.
When a business reaches a certain point in its life cycle, it can only make sense for it to grow further. However, growing a business is the hardest part.
You can grow your business by finding a means to generate more income while cutting down on costs. No matter how you would like to increase your profits, expanding your business typically involves investing in the right people, creating the right growth strategies, precise execution and having a war chest ready to fight the growth war.
How Do You Define Business Growth For A Small Business?
Every business will come to a point at which it needs to plan for further growth and expansion by business owners. This will not only help the company grow and increase profit but will also prevent the company from becoming non-competitive and being overtaken by brands with an improved value proposition, products and services.
But business growth and expansion comes with its own set of risks.
Accounting for those risks and preparing for them is crucial to your business’ survival. Before you decide to take these risks as a board of director and invest your money and efforts in expanding your business, you need to first understand how important integrated growth is for your business.
Why Should You Take Measures To Grow Your Business?
There is much to gain from growing your business.
In order to get yourself on the right path, you need to first determine what your business goals are.
What do you wish to achieve by growing business?
How do you plan to grow your business?
What are the key priorities you need to focus on to ensure growth?
Let’s take a look at some of the reasons you should invest in business growth and plan to move to the next growth stage by having a digital strategy and a marketing strategy in place.
1. Meet a Growing Market Demand
As you analyse your business and the current market trends, you will be able to figure out the different types of customer segments that you can serve.
Knowing when to move from current customers to serve non-customers (target group that is currently not your customer but potentially could be if you meet their needs), who to target and how to position your value proposition to the new segment; will put you in good stead for increasing market and business.
In doing so, you can reach an untapped market with greater potential than you may have known of when you first started your business.
2. Stay in the Competition
Technology is constantly progressing, and it is up to you to reach out to new markets and try new methods to beat your competitors.
Don’t be afraid to invest in better technologies and set up a presence in new locations to serve a new audience. Businesses must be bold to innovate by accepting new ideas and new technologies to be one step ahead of their competitors.
3. Build Trust With Your Customers
As you grow your business, your brand name automatically becomes more popular, giving potential customers a reason to trust you.
They start to perceive you as a private or public company that is likely to be around for a long time, making it easier for them to trust you with their requirements.
4. Reduce Risks
Contrary to what you may be thinking, investing more in the integrated growth of your small business will reduce your risk of being outcompeted by your competitors.
This is because you are spreading your business over a larger geographical market and have multiple income streams, thus improving your stability.
5. Reduce Costs
Being a growing business does have its benefits. For starters, you will be the financial means to order in big quantities and receive bulk discounts; and you will have better bargaining power with your suppliers, building a good rapport with them, thus allowing you to reduce costs and increase your profits.
6. Attract Better Opportunities
As you grow your business, it can lead to better opportunities.
Bigger clients will want to do business with you, and working with them can open up doors to even better prospects.
Remember, growth is a mindset. Once you decide to expand, your growth will only accelerate as you move on to the next development stage.
Now that you’ve decided to invest in the growth of your business, you need to learn about the different types of integrated growth strategies that companies use in order to grow their businesses quickly.
What Are The Types of Growth Strategies?
There are 5 popular growth strategies that growth businesses can implement.
Remember, these growth strategies are tried and tested methods by which large companies have been able to increase their profits and dominate their respective markets.
To effectively implement these growth strategies, you will need to devise a customized growth plan for your business according to the increasing market you are serving and according to how big your company is.
Let’s take a look at the different types of growth strategies and how they can be implemented.
Growth Strategy #1: Market Penetration
Market Penetration means to increase the market share for a current product of your company. For instance, if there is a lot of competition within the same market for a similar product manufactured by competitor companies, you could decide to go about lowering prices to attract a larger market share.
Another way you can apply the Market Penetration growth strategy to your business is by focusing on increasing your marketing, advertising, and other annual sales promotions. This will give your brand more visibility and increase your target audience’s familiarity with your company.
Growth Strategy #2: Market Expansion
Market Expansion or market development is when your company decides to start selling a current product in a new market.
This could be due to tough competition within your current market preventing you from procuring a larger market share. This means that your profits have no scope for increase, forcing you to find new ways for market development.
Market Expansion, commonly known as Market Development, can also be done by pushing your existing products in new geographical locations within the same country or to other foreign countries by exporting.
Growth Strategy #3: Product Expansion
Another popular growth strategy for small businesses is Product Expansion.
Product Expansion is to introduce a new product into the market. Instead of creating a new product from scratch, you could also choose to improve the features of an existing product or develop brand new features for it.
This could be done through product development and proper planning of sales and marketing based on your startup capital if you are one of the growing companies.
This will help you to directly increase your annual sales and thereby, your profits. This is especially important when there are newer technologies introduced in the market. You will need to keep updating your products so that you stay one step ahead of your competitors.
Product Expansion will also help those products which have lost interest in the eyes of your target audience due to their prolonged existence in the market. You can improve the features of an existing product and spend money advertising those features to your target market.
Always ensure that you keep your eyes open for both the product and market so that your business research is thorough and you can do strategic planning for your distribution channel and product lines.
Growth Strategy #4: Diversification
Diversification of your market is kind of a risky strategy for growth, but it can be very effective and push your business to the next stage when planned properly.
To diversify your market is to create new products for new markets. Before you venture into this growth strategy, you will need to carry out a lot of market research to know exactly what your target market needs. If executed in the right way, this type of growth strategy can pay off very well.
Diversification enables you to even out your risks as they are now spread over many different income streams and revenues. This is a very effective business strategy to reduce the risks involved with cash flow during the rapid growth of a company. It is also important to take into consideration the stage of growth your business is in.
Growth Strategy #5: Acquiring or Merging With Another Company
This growth strategy requires significantly more investment than any of the others mentioned above, especially when you want to acquire a company that is already established in the market with its products and services.
Acquiring another company can greatly help you enter new markets and gain a larger share of those markets.
On the other hand, you can also consider merging with another company to increase your overall profits as you obtain a larger share of the market.
How Do You Develop An Effective Business Growth Strategy? – 6 Quick Tips
To develop an effective business strategy, it is crucial to take factors such as your budget, the risks involved, and your company’s goals into consideration.
Here are 6 quick tips to help you develop an effective growth strategy for your business.
Tip 1: Taking the time out to conduct thorough market research and formulate a solid growth strategy for your small business is well worth the time and effort. Planning is the most crucial step in “climbing up the ladder of success”, so to speak.
Tip 2: Building a strong foundation for your business as an entrepreneur is the first and most indispensable phase of your business plans.
You need to develop and put down on paper what direction you want your company to grow in and what your ideals and goals are. Once you have that set in place, you will have created a road map for your company to follow so that you know where you are going by looking back and seeing where you’re coming from.
Tip 3: The next step in determining your business growth strategy is to take into account your budget. Although you will need to invest more to gain more returns, never forget that there is always an element of risk involved.
Tip 4: Make room for failure and always create a backup plan so that you are poised for success, but at the same time, well prepared for any type of loss you may incur.
Tip 5: Follow the growth strategies in the same order presented in this post as that will help you slowly climb up to the position you desire your company to be in. Always take your time while moving from one step to the next so that you have time to decipher how well your strategy is working and how far you need to move into the next phase.
Tip 6: Every time you reach your short term goals for your business, make sure to sit down and analyse what went right and what could have gone better. That way you will constantly improve your processes, minimizing your risks along the way.
How Do You Use Technology To Accelerate Your Business?
Technology is improving at a rapid rate every day.
It is imperative that you harness the power of the latest technologies in order to improve your business and accelerate its growth.
One of the main ways people use technology to grow their businesses is by digitalization. This will take your business to the next stage of growth.
Digitalization is the incorporation of new technologies to replace old, outdated, and obsolete machines and software that are currently being used by your company. Digitalization also included the use of digital technology for marketing, promotion, customer service and increasing sales.
Digitalization will greatly help you improve your value offering, and create efficiency in reaching out to the market, capturing sales and servicing your customers. It will also help you improve the quality of your products or services and reduce costs. These cost reductions and increased cash flow will create higher profits for the business.
Another popular way of using technology to grow your business is by utilizing social media. Everyone is on social media, and this makes it a great platform for you to offer what you have to your potential customers.
What Are The Benefits And Drawbacks of Digitalization in Your Business?
Better customer targeting, product quality and improved value offerings help to attract better target audience who may even be willing to pay a higher price for your products and services.
This is a way better strategy than lowering prices to beat the competition.
Digitalization helps to keep your business relevant in today’s business environment and will make your products and services relevant and more appealing to your audience. This will enable you to maintain an edge over your competition and gain loyal customers.
There are also some obstacles when it comes to digitalization.
For starters, digitalization involves a higher capital investment, which may not be the best thing for your company if you do not have the financial means to make it happen.
Implementing new technologies in your company (regardless of whether it is a private or a public company) will also require training that needs to be imparted to old employees, who may not be too familiar with them and may take some time to adapt to these new changes.
Keeping in mind the pros and cons of introducing the latest technologies in your business, you need to figure out the best time to do it and whether it will really be beneficial for you in the long run. The cost-benefit analysis and careful crafting of an implementation plan will be crucial in ensuring digitalization happens. The bottom line is that digitalization must happen and it must happen fast because our world is moving very fast.
Is Your Business Ready To Move To The Next Level?
So now that you’ve learned how important it is to grow your small business, it’s up to you to take the next step.
Take the time to effectively plan out your growth strategy in the best possible way for your business. Growing your business is a mindset. The challenge we should tell ourselves is, can we grow our businesses 10X, 100X or 1000X?
Resist the urge to compare your business’ growth with other businesses. The most important thing to remember is to keep growing.
Choose progress over perfection. Don’t be too fixated into creating the perfect business plans. Plans can be fine-tuned along the way.
What is your current business strategy? What measures are you taking to grow your small business?
Leave a comment below, we would love to hear your views!