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Small Business Growth
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Creating A Smart Business Growth Strategy

Transforming your small business into a thriving behemoth is sort of like a Sinbad voyage. There will be raging seas to survive, beautiful temptations along the way, and many monsters to battle to before you are able to claim victory. Often times it seems like the deck is stacked against you; in this country, only one-tenth of one percent of small businesses will ever grow to reach $250 Million in annual sales. Furthermore, only 0.036 percent of businesses bring in more than $1 Billion. So, first and foremost, set realistic expectations.

 

Intensive Growth Strategies

According to Fortune 500 Entrepreneur Keith McFarland, you’ll ideally want to concoct a business growth strategy that “brings you the most results from the least amount of risk and effort.” He recommends that small businesses focus on “lower-level rungs of the ladder” that present less risk, but also slower growth. These rungs include:


  • Market Penetration – Look for ways to sell more of what you have to more of your existing customers. Do people need a 12-pack of deodorant? Maybe not, but if it has a long shelf life and comes at a reasonable price, they may be persuaded to stock up on more of your anti-stink products. Think of finding new ways your customers can use your products. Baking soda is not just for baking anymore: it’s for kitty litter boxes, refrigerators and tooth-brushing too.

  • Market Development – How can you sell more of your products to people in the next market over? Begin your takeover in nearby cities and states first. Franchising has helped many small businesses expand with minimal risk. Who knew so many different markets would go crazy for a freaky clown and golden arches?

  • Alternative Channels - Sell to your existing customers in different ways, be it online, stalking them on mobile devices, or developing a rental program. Blockbuster had the right idea by developing their online and mail-order program, but unfortunately they had waited until the competition was already doing it first (and doing it better!)  

  • Product Development – Developing new products is more risky than the other growth strategies, but it is an essential engine of progress for most companies. Sometimes you hit the nail right on the head – like Apple did with the iPod – and you stumble upon an amazing moneymaker.


Integrative Growth Strategies

Once a company has climbed up the ladder using all of the aforementioned steps, it’s time for more drastic measures. Integrative growth strategies include acquisitions and mergers, but the risks are great. About 75 percent of all integrative growth strategies fail to deliver predicted value. 

  • Horizontal – Buy a competitor to add to your growth and breakdown a barrier.
  • Backward – Buy a supplier to develop products faster and cheaper.
  • Forward – Buy a component of your distribution chain to push your products.

 

Avoid The Pitfalls

When you’re deciding on your growth strategy, it’s important to avoid the common pitfalls small businesses make. First, zero-in on one strategy at a time. Many business owners make so many different goals that the business flops about like a headless chicken. Secondly, make sure your goals are written out, publicized, and that they are Smart, Measurable, Achievable, Realistic, and Timely. Remember, slow and steady wins the race.  

 

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Related Articles:
INC: How To Develop A Business Growth Strategy
NFIB: 3 Goal Setting Mistakes New Small Business Owners Make

 


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