It might seem like profitable businesses owe their success to luck, but, with few exceptions, their growth was the result of hard work and thoughtful planning. Today’s global economy requires that businesses distinguish themselves and prepare the challenges of increasing global economic volatility.
Of course, each business is unique. If you’re selling surfboards, your plan of action is going to look different than say, that of a children’s book publisher. One thing that all businesses should have in common, if they want to grow, is a solid strategic plan. If you’re ready to make the transition to big business, here are a few strategies to consider:
Secure Your Financial Health
Business growth is great, when you’re ready for it. Attempting to boost your business while dealing with financial woes can lead to disaster. No matter how great the product or service, looming debt, inconsistent budgeting and a shaky credit record will scare off potential investors and partners while ultimately shining through into poorer customer satisfaction.
The first step to achieving financial health is to build a comprehensive financial plan that includes contingencies for multiple scenarios. Your goal is to develop a document that lays out how your business will handle both the best and worst case profit scenarios. From then onwards, the right systems need to be put in place
Market Development and Penetration
If you’re already running a profitable business, you probably have a general understanding of your market. As your business grows, you’ll need to expand your knowledge of your key consumers and decide how you should broaden your reach.
Let’s say you’re a health food store owner. You’ve documented that most of your regular customers are between the ages of 25 and 45 and work out regularly. This is a good baseline for further development.
A low-risk market development strategy would involve ramping up your sales efforts and promotional activities to penetrate deeper into your existing target market. Knowing your market, you’d do better placing your promotional materials at a neighborhood fitness center than the local teen hotspot.
This might seem like a simplistic example, but many businesses end up drifting away from their core target market which can lead to scattered results and failure to thrive.
Market penetration tactics include price adjusting, to increase volume and attract additional customers and generating greater brand recognition through targeted advertising campaigns.
As effective as market penetration can be, once a market is saturated, growth can end up at a standstill. Market development can offer new opportunities for growth.
Expanding beyond your current market base could mean spreading into new geographic regions, improving a product or adding new products to appeal to a larger customer base. One market development tool that a health food store could implement would be offering web-based sales.
The key to market development is to expand your audience at a measured pace, so that you experience growth without making your offerings overly broad.
Explore New Products and Services
One way to grow your business is by trying something new. The same entrepreneurial spirit that inspired you to start your business in the first place can lead to substantial future growth.
Expanding your business by offering new products or services can help you to sell more to your existing customers and draw in new ones. This strategy can pose a risk, but it can also lead to huge rewards.
One way to expand is by improvement of products and enhancement of services. A new addition should make the product more valuable to your customer base and be difficult for your competitors to replicate.
Another way to widen your offerings is by adding an entirely new product. Your customer base might already be giving you an indication of what they’d like to purchase. The imaginary health food store has proven that it knows its customer base and offers quality food that meets the needs of its consumers. Branching out to offer a line of vitamins will appeal to the market while not straying too far away from its core competency.
Invest your time and energy into the development of products or services that meet the need of your target market first. If there’s a gap in the market, there’s probably a way that you can fill it and that can mean substantial growth.
Establish Business Partnerships
Speaking of that neighborhood fitness center, have you ever thought of partnering with them? Collaboration between businesses is an easy way to gain loyalty, expand customer bases and reduce expenses.
Business collaboration can take several forms. It might mean partnering with a business that sells complimentary products or services. It could also be a partnership with another business within the same industry.
There are several ways to collaborate with other businesses with growth in mind. Cross-promotion, utilizing shared facilities and cooperating on special projects are just a few ways that collaboration can save your business money and help it gain maturity.
Develop Integrative Strategies
Business mergers and acquisition might seem like a far-fetched plan for your business, but this is actually a doable strategy, even for smaller businesses. Unless you have access to unlimited resources, following a conscious game-plan and managing your timing when implementing this strategy is absolutely essential.
One scenario involves your business purchasing or starting a business that buys from or sells to your existing business. This business can be directed toward (forward) or away (backward) from the consumer.
If our hypothetical health food store purchased a vegetable farm, it would then have access to a consistent flow of whatever vegetables the farm grows. This backward vertical integration strategy can protect the store from a shortage created by multiple businesses vying for the same vegetables.
The second scenario assumes that an opportunity arises to purchase an existing health food store, in a different area of town. By acquiring this business, our fictional health food store not only reduces its competition, it also has an opportunity to assume additional customers.
Yet another scenario might involve a merger between the two health food stores. This horizontal integration could increase access to different products and geographical regions while reducing competition. Each store benefits from the skills and resources that are unique to that business.
Developing a strategic plan that includes action steps for multiple contingencies will allow your business to seize appropriate opportunities as they arise.
Preparing for growth is an exciting time in the life of any business owner. Set your goals and determine your strategy and soon you’ll watch your business soar to new heights.