Last Updated on March 1, 2024 by Owen McGab Enaohwo
Every small business requires a solid growth strategy to shift its status from being a small business to a big one. Most startups are often fueled by positivity and the enthusiasm of their founders. However, this will only take them far.
Company leaders need to review their businesses and develop means that will help them grow, lest risk a stunted growth, which ultimately leads to irrelevance. It is also prudent to move quickly into coming up with a tangible business growth strategy as the world is changing fast, and the variables can easily change.
The sad truth is that most of these businesses fail because they missed taking this crucial step. According to the Bureau of Labor Statistics, about 20% of all startups fail within the first two years, 45% fall during the first five years, and only 65% of them can make it to a decade.
Most of those businesses are usually running on ‘borrowed time,’ and it will be like gambling ‒ it either fails or succeeds. Without a solid growth strategy in place, you’re at the mercy of market fluctuations and a fickle consumer base.
But are you really ready to gamble your business idea? Of course not.
This article seeks to help you understand the top three growth strategies for your small business for long-term success.
But first, let’s first understand what a business growth strategy really is:
What is a business growth strategy?
As the name implies, a growth strategy is simply a plan of how you would get from where your business is today to where you want it to be in the future. According to Gartner, a growth strategy is an organization’s plan for overcoming current and future challenges to realize its goals for expansion. The most common types of growth strategy goals include enlarging market share and revenue, acquiring assets, and improving the organization’s products or services.
From this explanation, some people might confuse this term with a business plan. However, this one is solely focused on you and how you will grow the startup. For you to come up with a solid business strategy, some of the key questions to get the answers are:
· Where will your customers come from?
· How do you intend to expand into new markets?
· What products would you like to provide that solve the issues your target market faces?
The answers you get from these questions will directly impact the growth strategy to go for. Here are the top business growth strategies and tips to consider:
1. Be adaptable to change
The world changes fast, and the tricks used by older, thriving businesses may not apply to this era. You need to be flexible enough to embrace change in the way you run your business: in all key aspects of product development, marketing, and sales.
In the product development phase, you should have your ears and eyes on the ground to understand what the customers want. You should try out product expansion strategies to look for different products that you can offer to your clients to satisfy their various needs. Don’t be fixated on only having one product throughout or having the same product looking the same way over and over.
If the going gets tough, there are other ways that you can save your business ‒ through strategic partnerships. You can partner with a rival (or a company that you can work alongside comfortably), and you pool your resources together to target a singular audience. By doing so, you can attract more clients, hence better business for you.
Acquisitions are other methods that can prove worthwhile as a result of the changes in the market. If you have the right resources, you can acquire a business (most likely another competitor) and take up their business structures.
Besides the stability that such partnerships might bring to your business, they may also help you cut down on costs, increase efficiencies, and ultimately, help your business grow.
Regardless of the strategy you use to adapt to change, you should learn all the nitty-gritty surrounding the act. Mergers and acquisitions, for example, have lots of legal implications and implementation strategies that you ought to know more about.
Fortunately, you don’t have to undergo any formal training or blow out cash when learning the ins and outs of the trade. This is because you can simply register with some of the best online course platforms and increase your knowledge of the market.
2. Market penetration
Market penetration is among the most effective strategies to develop for any business joining the market for the first time. Startups use a market penetration strategy to market their existing products or services to an already existing market. The only way to go around this is to increase your market share, which is the percentage of units a company sells compared to competitors.
Implementing various strategies in this phase is crucial as your business will be going head-on with competitors. Some examples of market penetration strategies employed by most companies are:
· Reducing the selling price of their products or services – is an excellent strategy to keep your profit margins little during the market penetration period. You’ll always be able to attract consumers with lower prices, as long as you are not going at a loss. This is the strategy used by Walton to attract customers to Walmart, and it worked.
· Increase product promotions to improve the pull strategy – you shouldn’t only rely on conventional advertising methods to get more clients. You can also consider having special promo events, having special offers, rebates, and incorporating modern techniques like encouraging customers to Scan QR Code, can significantly impact your business.. Not only with this strategy appeal to your customer base, but it will also create awareness to those that weren’t initially in the know about your business.
· Expanding distribution channels – for you to claim a bigger market share, you need to consider other distribution channels, such as looking for more dealers, retailers, distributors, etc. You can also look at another direction by entering into strategic partnerships with other major channel players. One of the best examples of this growth technique is multi-channel e-commerce – digital retail businesses may start with a single customer touchpoint and then expand to other digital channels (like social media or sales via popular marketplaces). Expanding distribution channels is so important in retail because modern consumers use various platforms and devices to shop.
· Zeroing in on the competitor’s client base – another market penetration strategy you can use is by looking at your competitors, identifying who their customers are, and trying to win them to cross over to your side. You should also look at the competition’s distributors, retailers, and dealers and see if you can offer them a better deal than your competitors. They might just consider abandoning the competition and crossing over to your side. Researching the competition could be surprising. Some realtors, for example, rely on a naturally developed sphere of influence, while others have discovered the best places to buy real estate leads.
Market penetration stands out as a key growth strategy for small businesses, allowing them to deepen their market share and maximize their presence within existing customer segments. Employing effective marketing techniques and understanding how to handle cookies in web scraping enhances the precision of targeting strategies, ensuring businesses reach the right audience. By strategically navigating the market landscape, small businesses can optimize their resources, attract new customers, and solidify their position for sustained growth.
3. Market development
Market penetration is a surefire strategy to get into a completely new market as you target a new clientele. However, what happens if you already have a market share and wish to expand to other markets? This is where market development comes in. A market development strategy pertains to launching existing products or services to a different audience, apart from the one you currently have.
There are many reasons that can make you go for the market development strategy. However, the two main categories are: things are going so well that you want to use your profits to expand your empire, or things aren’t doing so well and would like to test the waters elsewhere.
At times, the market can become saturated and the competition too stiff for you to keep up. That’s the ideal time to start looking for other markets to keep your business running. In this scenario, the products (or services) remain the same, but the market changes. It can be a different geographical location or a different target audience.
But keep in mind that an international expansion can make it harder to perform certain business duties and remain compliant, like payroll. Payroll taxes are more complicated once you start hiring employees in a different country. However, you can calculate your payroll tax rates with OnPay’s calculator if you want to estimate your tax burden for US employees at the very least. If you want to include international employees, you may need to hire a professional accountant.
Conclusion It is no brainer that small businesses aren’t going to have it easy when expanding their operations. But these three tips are what it takes for one to grow their businesses to bigger ones, with more clients and better revenue. A well-executed business growth strategy eventually wins you a larger market share, even if it means taking a financial hit in the first place. However, commitment and having a good plan will get your small business growing in no time.
Author’s Bio
Lidia S. Hovhan is a part of Content and Marketing team at OmnicoreAgency. She contributes articles about how to integrate digital marketing strategy with traditional marketing to help business owners to meet their online goals. You can find really professional insights in her writings.
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