The goal of any business is to expand and grow. Most entrepreneurs enter into running a business with a vision of what that might become, and growth is often necessary for survival in a highly competitive marketplace. Many businesses can stagger along for a while at a sustenance level, but that’s not what most leaders want – and certainly not what any investors want. Boosting a small operation into something profitable that generates consistent income, contributes to the local economy through providing employment and custom and serves customer needs is the ultimate end result that you should be aiming for. And for this you need one thing – a growth strategy. Working from your original business plan, a growth strategy bridges the gap between where you are and where you want to be, and with careful planning and some added investment, can pay dividends.
Growing Your Existing Market
This is the most applicable growth strategy for a lot of businesses, especially ones who have strong relationships with customer advocates, a good understanding of the market they operate in and a good niche in what they do. Don’t make the common mistake of immediately thinking about how to get new customers all the time when your existing customers are the best bet for maximizing your sales. It’s a much greater return on investment if you can get people who already understand what you do and are happily buying from you to increase their spend or branch into new products or services. Customer retention is a very cost effective strategy, and whether that means winning new forms of business from existing clients or increasing the average basket spend on an ecommerce website, it’s a tried and tested form of business growth that should be your first port of call.
Develop a Referrals Scheme
Second only to increasing business with your existing customer base – Getting them to recommend you to others! Although there’s no reason why these two complementary strategies can’t be used together. The best recommendation for your business to someone who hasn’t dealt with you before is a glowing review from a customer that they know. So setting up an incentivized referral scheme is something that should be top of your list for consideration. Actively seek referrals out by using tools on your website and social media to make it easier for others to share what you do – and add something for them into the deal. Leverage the power of social media and let your customers spread the word about you, or use testimonials as a key part of your marketing strategy.
Extend Your Reach
When you’ve set the two strategies above into motion, you can move on a third front – extending your market reach. This is a big shift that generally requires preparation and investment. You might find that you need to scale up systems and processes pretty rapidly if this takes off – everything from taking on additional staff to purchasing or hiring new machinery, expanding your office space, taking on virtual services to help you with business support processes such as chasing up invoices or accessing customer data – the exact nature of it depends on your business. It may involve opening new physical locations, or even virtual ones like an online shop. You should support this move with a targeted advertising strategy that drives up brand awareness and conversions within new customer segments to generate more demand. Often with this strategy it can be a little chicken-and-egg – you need the growth in sales to fund the expansion, but you need to expand to service those additional sales. So be prepared to seek out growth capital funding to give you some financial breathing room while your business makes the expansion. If you have a solid business case and some proof of the demand, then aim to leverage relationships with existing funders, or target a specialist growth funding provider for support. This move takes a lot of careful planning, but it’s one which can take your business into another league.
Focus On Reducing Costs
This one may seem like it doesn’t belong on the list, but actually contraction is a form of growth. Because what you are trying to do is increase profit and grow your bottom line – and that can be done without expansion. The difference between pre and post tax profits can be a huge one, which makes constraining costs a highly effective growth strategy – and one that can be combined with others on this list. You may look at liquidating products which aren’t performing well or cutting loss-leader service, or you could focus on improving your inventory turnover. Either way, a well-thought out cost containing strategy can equal growth on paper which can prepare you for an expansion by creating more working capital to expand in another direction.
This is a contributed post