Welcome back to our small business growth series! In Part One we discussed seven great reasons why every small business owner should be pursuing growth in some capacity. Part Two is all about how to actually achieve it!
Just making the important decision to grow your small business is a huge first step that is vital for building momentum. The key is to then channel that momentum into the right growth strategy. Unfortunately, there is no one-size-fits-all formula for growing a small business, and the path you choose will depend on your particular business and desired goals.
But don’t worry, there are great strategies out there for just about every situation. Some involve a large investment of time and money, while others require only minor adjustments to current operations. So if you’ve decided that now is the time to start focusing on growth, then keep reading as we discuss 7 Strategies to Grow Your Small Business.
1. Increase Market Penetration
One of the most effective growth strategies for small businesses is to increase penetration in their existing market. The basic aim of this strategy is to improve sales in order to maximize world market domination. This is a relatively low risk approach as it generally doesn’t require a large financial investment to implement.
Increasing sales in an existing market means gaining the upper hand over the competition in some way. The easiest way to achieve this is of course to simply lower prices in order to match or even undercut competitors, aka the Walmart way!
Unfortunately, for companies that aren’t monolithic megacorporations, this is not always a viable option, as smaller companies tend to have tighter profit margins. So in lieu of refinancing the company vehicle or selling a kidney in order to lower prices across entire product ranges, small businesses can use alternative tactics to increase sales such as:
Promoting daily, weekly or monthly specials
Offering first-time buyer discounts to attract new customers
Providing bulk discounts to encourage existing customers to buy more
Hosting special events with one-off price points
Increased market penetration results in a broader customer base, which can outweigh the profits lost from any temporary price reductions and ultimately allow greater pricing power.
2. Expand Product Range
People love new stuff – maybe it reminds us of a simpler time when a jolly octogenarian used to bring us toys every year. Whatever it is, it’s no secret that people get excited by shiny new products, which brings us to another proven strategy to promote growth within an existing market – product expansion.
This strategy is all about improving product lines in order to increase sales. To implement it successfully, a company should take a critical look at its products, as well as the products of its closest competitors. By analyzing where its products sit in the market, the company can identify ways to differentiate itself from the competition by:
Introducing new products and services
Revamping old products that are no longer performing optimally
Removing products that customers no longer find desirable
Creating new varieties of existing products
Testing new products with ‘limited edition’ launches
Forming ‘sales bundles’ of products that are often purchased together
3. Investigate Alternative Channels
In today’s highly competitive business arena, it’s never a bad idea to explore alternative ways to sell products. New sales channels are ideal tools for reaching a wider audience, highlighting products and boosting brand awareness.
Fortunately, thanks to a nifty little invention we fondly refer to as the internet, alternative channels are more numerous and easier to access than ever before. Brick and mortar businesses should definitely consider the incredible opportunities available to market and sell products online. In today’s digital world, all companies should at least have a user-friendly website, an engaging social media presence and effective email marketing campaigns. From there the sky’s the limit when it comes to utilizing new ways to sell products and services online. And the great thing about digital sales channels is that they can provide access to a national or even international audience, without a company having to expand their physical presence with more locations.
Conversely, solely digital businesses shouldn’t overlook the benefits of connecting face to face with customers to establish brand loyalty. These companies should think about in-person sales tactics such as setting up pop-up shops, selling products at local markets and manning booths at community events.
4. Expand Into New Markets
If you can’t beat them, outrun them!
When faced with a highly saturated market, the best growth strategy may be to expand into new markets where competition is lower. Detailed market research and analysis is the key here to identify market opportunities where a company’s existing products or services are likely to perform well.
With proper research and planning, companies can corner unsaturated markets where they can provide a strong value proposition and rapidly grow their customer base. This strategy can even bolster sales in existing markets, as a broader customer base will increase overall brand prominence.
5. Focus On Market Segmentation
Being a small business in a large market is like being a little fish in a big pond; every day is a constant battle for survival, and sooner or later a mutant catfish is going to swallow you whole! The solution is to make the pond as small as possible.
Market segmentation is an ideal growth strategy for companies faced with the challenge of securing a foothold in a large market filled with bigger companies. The four basic types of market segmentation are: geographic, demographic, psychographic and behavioural. But each of these can be broken down again and again into smaller and smaller segments.
By separating one large market into smaller, focused segments, a company can tailor its specific products and services to specialized individual groups. This is far easier than trying to market products to a broad, generalized customer base, and allows for different products to be targeted at different customers.
6. Cultivate Productive Relationships
There’s no denying that small business owners prefer doing things their own way, which has a tendency to foster a natural weariness of forming partnerships. When you build something with your own hands from the ground up, it can be extremely difficult to let someone else be a part of it. But the small business world can be a lot like the show business world, in that: “It’s not what you know, but who you know.”
Partnerships can be a great growth strategy for small businesses and come with a range of benefits. Partnering with another company could mean the ability to take on a large client or project, share skills and knowledge or even access new equipment and technology. Companies may also team up to launch a collaborative product, form a sales package or host an event together.
The key to successful business relationships is the same as with personal relationships, it’s all about finding the right partner! In an ideal partnership, the companies involved will not be direct competitors, but will share similar brand values and business culture. The aim of the partnership should be to access each other’s customer bases to the mutual benefit of both companies involved.
7. Maximize Existing Customer Base
Most growth strategies focus on capturing a larger client base in order to increase market share, but that doesn’t mean that companies should underestimate the importance of keeping their existing customers happy. Retaining customers may not seem like much of a growth tactic, but companies that do so enjoy several advantages.
Firstly, it helps keep business costs down, as it is much cheaper and easier to keep a customer than it is to attract a new one (a customer in the store is worth two on the street!). Improving customer loyalty also encourages organic growth via word of mouth advertising. It has even been shown that returning customers spend more money on average than new ones, meaning better sales numbers.
Creating customer loyalty is all about building trust and the best way to do that is through great service. Companies looking for ways to maximize their existing customer base should:
Utilize mailing lists with targeted email marketing campaigns
Improve services to enhance customer experience (e.g. bolster customer service via phone or chat support, redesign store layout, build a more user friendly website)
Create customer referral incentives
Host special events, giveaways and deals for existing customers
Encourage customers to leave reviews
Engage with customers on social media
Obtain regular feedback from customers to identify areas in need of refinement
Final Thoughts
While there are some great businesses out there that can survive by maintaining the status quo, they are few and far between. For the majority of small businesses, staying still has a similar outcome to when a shark stops swimming (spoiler: it doesn’t end well!).
Growth is essential to the long-term survival and success of most businesses. Even if your company doesn’t have its sights set on world domination (yet), there are still plenty of effective growth strategies that can be implemented to improve overall operations and profitability.
With the right strategy, a little patience and a lot of determination, every small business owner can set their company on a path toward growth. Deciding on the right path to take is often the hardest part, which is why it helps to have a co-pilot who knows the way!
If you want to learn more about how our Advisory and Enterprise teams can help your business achieve its growth goals and reach its full potential, then get in touch today!
