6 Proven Business Growth Strategies for Small Businesses
Business expansion is not a matter of increasing profits - it is necessary to survive a competitive market.
Studies show that approximately 66% of businesses surpass two years of operation, while 50% make it to the five-year mark. These metrics remain consistent throughout most industries, stressing the importance of business growth no matter what market a company is in.
Business growth strategies set long-term goals in place and determine how a company plans to reach them. Whether expanding store locations, customer reach, or product lines, implementing a growth strategy puts a plan into action, increasing scalability and profits.
6 Business Growth Strategies
Companies that have reached a plateau need to start planning how to promote expansion and profitability. Successful growth strategies should be able to quickly accelerate expansion in a sustainable way, ensuring the organization's longevity.
Businesses should consider the following best practices while developing their growth strategy-
1. Market Penetration
Market penetration is used to increase the market share or exposure of a new product line. Common strategies include advertising, product bundling, exclusive discounts on large order volumes, and competitive pricing.
While lowering prices may seem counterintuitive, it is useful for meeting the company's short-term expansion goals. For example, a business that is launching a new product line similar to surrounding competitors can lower the retail cost to attract customers, boost sales, and build a client base.
However, if these efforts are unable to improve an item's market share, a company can couple it with a popular product as a complimentary accessory. Once the item gains enough recognition, it can be separated and sold at full price.
2. Market Development
Market development strategies aim to promote existing product lines or services to new buyer persons or customers in a different location.
Companies should consider launching a marketing development strategy if the market has recently been oversaturated with similar products or if it has become challenging to attract new consumers.
Even popular products are bound to experience a decrease in sales and profits eventually unless the company can successfully expand to different markets. For example, Nike was able to increase its customer reach and generated revenue by expanding to international markets.
However, small businesses that do not have the budget to launch growth campaigns may still be able to boost sales by marketing the same products in a unique way. For example, a restaurant can promote signature dishes via private catering or local grocery stores. This gives the business an opportunity to play with product packaging and discover new customers.
3. Alternative Sales Channels
Venturing out and using alternative sales channels is one of the most effective growth strategies. While many businesses already use multiple online marketplaces, it may be worth looking into a different marketing platform entirely.
Email marketing, social media, and business websites are the top three marketing channels available. While only 64% of small businesses have their own website, most customers expect to view an organization's website to research product lines.
Email and social media are free tools that allow companies to create personalized content and directly contact consumers. These are great options for startups that do not yet have the funds to launch their online store.
Studies show that having an online and offline presence optimizes business growth. Therefore, companies should consider launching advertisements via social media, google, and email, as well as traditional guerilla marketing, to boost exposure.
4. Product Expansion
By adding new features or accessories to an existing product line, businesses can promote sales and expansion in an established market. For example, Coca-Cola has launched several flavor options with its original beverage, including cherry, vanilla, and orange-vanilla, to pique consumer interest.
If an item continues to underperform even with new extensions, it is time to phase the line out and introduce newer versions. However, it is vital to research the market demand and value of the new product line before launching to avoid making a poor investment.
5. Market Segmentation
Market segmentation is useful for small businesses as it segments a market into groups according to customer preferences, areas of interest, location, and other parameters. This is not an ideal growth strategy for larger enterprises, as they often handle multiple markets and larger client bases.
These segments enable companies to develop targeted marketing campaigns according to specific aspects, including-
Market segmentation requires extensive research into buyer personas, customer profiles, and popular items so the marketing team can create relevant content. Aside from reviewing market trends, businesses can conduct email surveys and site analytics to discover consumer preferences.
Businesses should consider partnering with another company that is also focusing on expansion.
Through mergers, acquisitions, and partnerships, establishing a symbiotic relationship will benefit both parties involved and increase the companies' resources. Depending on the agreement, the resources could include labor, business intelligence, equipment, and analytics.
By extending the number of resources available, businesses can significantly decrease their workloads and commercial risks involved in growth ventures. Partners can also share clients and collaborate on different expansion projects, such as marketing campaigns.
Discovering which growth strategy is right for their business enables owners to invest in expansion efforts that will promote their long term profitability. It also allows companies to explore new markets and establish a presence in various platforms.
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