Overnight success stories seldom happen by accident. Behind every inspiring story of global expansion are carefully considered business growth strategies. These successful growth strategies vary enormously, for example, focussing on new products, market penetration, new markets, segmentation, partnerships and marketing opportunities.
There’s no single track to success that’s guaranteed to work for all small businesses, but there are many different growth plans that might bring huge rewards for a company. Some strategies may be particularly effective in certain industries, whilst others might work best for particular products or services. Above all, remember to make sure you have defined what growth looks like, why it’s important and crucially what are the associated risks and costs.
In the latest installment of our growth series, we’re going to discuss the different growth strategies that businesses may be able to benefit from.
New markets provide an incredible bounty of untapped opportunities for businesses, and the market development strategy aims to realise this potential. This business growth strategy, for instance, is a great one to follow if a company’s existing market is saturated, or if a company has already achieved its market penetration goals and is unable to increase customer numbers significantly.
Market development means taking existing products or services to a new set of customers and that often translates to expansion into new geographical areas. For small businesses this could include broadening national operations, or even branching out into markets overseas.
New markets don’t necessarily have to be in entirely new locations. Other options that are particularly helpful to smaller companies include expanding with new offerings for B2B customers, or marketing existing products to new customers is an entirely new way. For example, a thriving street food entrepreneur might consider launching an events catering business, or opening a restaurant to appeal to a new group of customers.
Businesses looking to move to the next phase of the growth cycle should always consider the market penetration strategy. The market penetration strategy has a simple objective: to boost a company’s market share via promotion of the product in question. The target is achieved via a range of different methods which might include, for example, promotional sales, discounts, price drops and advertising.
Whilst seemingly unattractive at first glance it might be dropping prices can be one of the most successful, proven ways of increasing market share. But of course, the obvious disadvantage of this strategy is the knock on effect that such a move will have on profits. Companies opting for this strategy will need to weigh up the pros and cons of such a tactic in both the short and long term. If the long-term benefits of an upsurge in market penetration outweigh the negative effects on profit margins and cash flow in the short term, then this strategy may well prove advantageous in the long run.
If a price drop isn’t an option, companies can also escalate their market share via other methods, such as offering free products when a certain item is purchased. Bulk deals are another effective way of enticing customers, and encouraging them to make a purchase.
Segmentation is an effective business growth strategy. The idea behind this growth strategy is that by segmenting their market into groups of similar customers, or buyer personas, a business will be better equipped to target to them directly.
In other words, the market segmentation strategy enables a company to speak to such groups in a more personable way, appeal to their pain points and offer a solution. The results of these types of strategies can be incredibly impressive, providing a massive increase in sales and a boost to profits.
Marketing is crucial to all business growth strategies, and this one narrows in on any untapped potential that new marketing options might present. Often small businesses make use of a range of different marketing tools. However, all too often small businesses will discover a type of marketing that works for their company, and focus on this method exclusively. When this happens, there’s a world of opportunity that isn’t being utilised.
In order to push a business into its next phase of growth it’s vital that business owners make use of as many different marketing channels as possible. It may sound obvious, but having a user-friendly, responsive website is one of the most important aspects of any growth strategy. It might surprise you how many companies don’t! According to research by creative company Visual Objects, 40% of small businesses still don’t have a website and 28% say they likely won’t in the future.
Alongside websites and social media, there are a whole host of new channels and tools worth considering. For example, tracking, discount codes, SEO, AI-chatbots, Google Adwords, remarketing, email marketing campaigns, influencer campaigns, social advertising and much more.
It doesn’t matter how loyal your customers appear, if you don’t invest in innovation and launch new products from time to time, they’re guaranteed to tire of what you’re offering. Launching new products is a powerful growth strategy, which comes with a range of benefits.
Many of our best-loved brands continue to release new versions of popular products, to keep customers talking about them and encourage them to try something new. Take Apple for example, a new iPhone arrives every couple of years and we all rush out to buy it as it delivers the latest in innovation into the palms of our hands.
Nissan have demonstrated another prime example of product development. of Over 10 years ago they recognised two key factors; growing concerns about the impact that cars have on climate change and rising prices in oil. As a result, they launched the Nissan Leaf, an electric car that has a big appeal to the growing numbers of environmentally conscious people but also people who want to save on fuel costs. Recently, Nissan just announced it has sold 400,000 Nissan Leaf EVs worldwide making it the first manufacturer to pass that mark.
We can’t talk about innovation without mentioning the risk involved. Quite clearly all investment comes an element of risk, and certainly product expansion is no exception. Customers might not like a product, or their preferences might be swayed by circumstances outside of your control. It’s vital that businesses complete thorough research before following a product expansion strategy, to ensure the best possible chances of success.
If a small business reaches the limits of its expansion potential, or a business owner is unwilling or unable to expand a company further, then partnerships may be a viable option. There are many ways in which partnerships can be used to grow a company. Businesses can merge with other companies, partner with or acquire similar organisations.
Typically these can provide enormous benefits, giving a company instant access to new markets, resources and opportunities. There is an element of risk to be considered in partnerships though. As a result, it’s vital that businesses opting for this growth strategy are fully aware of the legal and operational implications of their actions, and prepared for any problems that the decision might present.
To sum up, if there’s one thing that does unite these very different business growth strategies, it’s the enthusiasm, effort and expertise that’s needed to make each one a success. Incredible success stories in business are almost always the result of great planning and carefully-considered growth strategies perfected via hours upon hours of shrewd decision-making.
Keep an eye on our resources page for the next installment of our growth series. The next article will focus on how to measure business growth. We’ll provide you insight on how best to measure growth, and which metrics you really need to be looking at to determine the success of your growth strategies.