Most small companies have plans to grow their business and increase sales and profits. However, there are several growth options that could be followed. The method a company uses to expand its business is largely driven by its financial situation, the competition and even government regulation. Some common growth strategies in business include market penetration, market expansion, product expansion, diversification and acquisition.
Don’t make the mistake of attempting to grow too soon but wait until you have a period of successful trading behind you to provide evidence that your business model works.
With this in mind I have focussed my comments on the growth options that are best suited to small established firms.
Most businesses opt for gradual, organic growth that is more manageable and involves less risk. There are a number of well-established strategies:
Are there new markets into which you can sell your current products? This is often best considered when current sales have plateaued, it involves little or no product development resources.
At this point, you will have tested one or more products and found out how they performed. At least one will have been an existing product which has already performed in other markets. You can use the feedback and data you’ve gained from successful markets to build messaging in new ones.
Any market expansion strategy should include a marketing component. This should focus on engaging your new customers. It should reflect both the channels through which you will engage with customers. It should also include the value proposition you plan to deliver to them.
Within your existing customer base or market are there additional products you could develop and sell?
You may plan to invest in new product development as part of your growth options. This opens new revenue opportunities that can drive businesses to success. Your goal is to develop your new product from concept to market introduction. First, identify a need in your target market that your product will fulfil.
When small companies employ a product expansion strategy, also known as product development, they continue selling within the existing market. A product expansion growth strategy often works well when technology starts to change. You may also be forced to add new products as older ones become outmoded.
From tiny acorns…
Growth involves risk and commitment; but, well-managed, it should be achievable for most businesses. It will not necessarily happen fast or enable you to retire next year; but every large business started somewhere.