You’ve created a product or service that your target audience appreciates, developed a brand, and finetuned your processes. You’re profitable and doing well, but your small business isn’t growing. What gives?
Developing effective business growth strategies is a serious challenge. Just one in five manage to scale their businesses, according to McKinsey research. Despite this, more than 60 percent can succeed, provided their business growth plan is detailed and addresses key areas. On this page, we’ll outline six foundations of successful growth strategies so that you can take your enterprise to the next level.
The Impact of a Successful Business Growth Strategy on Your Company
All too often, entrepreneurs and company leaders focus on the creation of the company as a revenue stream. Still, more than two-thirds of value creation is achieved through scale-ups, McKinsey consultants say. That’s because a focused business strategy lets you cut out the noise and target your resources on a single aspect of the business.
Strategies for Effective Business Growth
With the right formula, most businesses can thrive and grow. Use the strategies outlined below and follow the steps to ensure you’re primed for success.
1. Identifying your Target Market for Business Expansion
Before you begin to develop expansion strategies, it’s important to consider which specific area of your business you want to develop more. You can’t grow every area at once, or you’ll dilute your resources. However, a few common tactics are outlined below.
Market Penetration – Maximizing Your Marketing Efforts
A market penetration strategy aims to successfully launch a new product or increase the market share for an existing one. Examples include:
- Reducing your prices to attract a wider audience
- Running specials
- Creating packages of your products or services
Alternative Channels
It’s a big world, and there are many ways for you to reach new customers or increase the spend of your current customer base. Examples of channels you might try include:
- Business website or online storefront
- Social media
- Digital ads
- Permanent brick-and-mortar shops
- Temporary pop-up shops
Market Development – Reaching a New Target Audience
With a market development strategy, you’ll be trying to get your existing products or services into the hands of new customers in new markets. Examples include:
- Expanding your territory
- Selling in new locations
- Reaching a new potential buyer with a different message. For example, you may sell yoga mats online, but perhaps you could create a model in which yoga teachers or gyms sell your mats for you and get a cut of the sale.
Market Segmentation – Streamlining Your Marketing Efforts
Often, segmentation is thought of in terms of marketing. You’ll want to reach individual customers with a message that resonates specifically with them. Perhaps you have customers of all ages, but you know your younger audience will prefer different language and contact methods than your older audience, so you’ll make different ads and brochures for them. When you use market segmentation as part of your growth strategy, you’ll zero in on a specific group and cater to them so that you can build out your customer base with that particular group.
Product Expansion – Aiming for Sustainable Growth
Sometimes, changing up your line can make it more appealing to new customers and your current customer base. Examples include:
- Creating new products
- Adding new features to existing products
- Modernizing your offerings
Diversification – A Risky but Potentially Rewarding Growth Strategy
With a diversification strategy, you’ll be trying to launch a new product or service in a new market. It can be particularly challenging for small businesses to make this work because it generally requires immense amounts of market research and resources. Plus, it can be hard to recover if you don’t nail it. However, if your new market is similar to an existing market you serve and there’s a fair amount of crossover, it can work. For example, let’s say you run a trucking company and you operate a fleet of refrigerated trucks for the restaurant industry. It might not be a far stretch to purchase additional equipment and begin delivering supplies or chemicals. Again, though, research is paramount.
2. Conduct Research on Whether your Chosen Area of Growth is Feasible
As you explore potential target areas, ask yourself two questions:
- How will expanding in this area help my business in the long run?
- Is this focal area feasible?
You may need to conduct market research to get a definitive answer. Consider polling current and potential customers or hosting some focus groups if you can’t find existing data to clarify the feasibility of your plan. For example, you may think expanding your territory is a good idea and have your sights set on operating in a neighboring county or state.
3. Invest in Good Staff
Your team can make or break the customer experience, so you’ll want to have the right mix of people on board and ready to help when your business levels up. When hiring, consider:
- The total number of people you’ll need.
- The skills each team member needs to have as well as unique skillsets you’ll require.
- The culture you’re trying to create and the personalities, traits, and behaviors your business needs to achieve it.
4. Setting Tangible Business Goals for Growth
To measure your success later, you’ll need to set clear goals now. Most are familiar with the SMART Goals framework. That means the goals you set are specific, measurable, attainable, relevant, and time-bound.
To give an example, let’s say you want to focus on product development. Your goal is to modify some of your current products, so they’re new products. Maybe you sell wooden horses, and you can easily convert them into unicorns. Instead of stopping there, you’ll want to quantify the number of unicorns you intend to make and set a clear date by which you wish to have them ready. Your final goal could be, “Have 500 unicorns ready for market by November 1.”
To improve your odds of success, break this goal down into smaller milestones. You might need to note when you’ll need supplies by, how many you should have ready by specific dates, and so forth.
5. Allocating Resources for Achieving Business Growth Goals
No matter what your goal is, you’ll need resources to reach it. Consider making a two-pronged list that includes non-negotiable resources you must have to execute your plan and resources that can help you grow your business faster or more efficiently. A few areas that can serve as jumping-off points are covered below.
Funding
If you don’t already have cash and aren’t sure which solution is best for your situation, read “What Working Capital Options Are There for Small Businesses?” for an overview of solutions.
Professional Service Providers
You may need someone to handle your marketing campaigns and advertising, a consultant to help you nail down your market expansion strategy, a lawyer to examine contracts or help from another specialist. Connect with professionals ahead of time and build the expense into your budget too.
Tools and Equipment
Some costs are obvious. For example, maybe you operate a trucking company and are adding another trailer as part of your growth strategy. But, there are usually hidden costs too. In this case, there may be licensing and insurance too. You might also discover it’s hard to track all your trucks and trailers after your expansion, so you could need to include software too. Brainstorm with your team to uncover potential needs to ensure you’re prepared for them.
Raw Resources and Supplies
Take time to evaluate both obvious and hidden costs here too. For example, you may need extra wood and paint to make your unicorns, but you’ll also require additional packaging material for shipping if all goes well.
6. Look at What Your Competitors Are Doing
Watching what your competitors are doing too closely can kill innovation, but you should have at least some general knowledge of what they’re doing. That way, you can capitalize on any opportunities they’re missing and bring your offerings up to speed if they’re doing something that will chip away at your share of the market.
Financing Your Business Growth with Debt-Free Working Capital
If you’re in the B2B sector and invoice your clients after work is performed or goods are delivered, invoice factoring can give you cash injections as needed to help you scale your business. Top factoring companies like Charter Capital provide working capital solutions without adding debt, allowing businesses to grow sustainably. It’s similar to getting an advance on an invoice, but there’s no debt to pay back because your client ultimately pays their invoice, and most businesses can leverage it because it doesn’t have the same stringent requirements that bank funding options do. To learn more or begin the approval process, request a quote from Charter Capital, or contact us today for more information!
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