As a business professional who regularly interacts with small business owners, I have oftentimes heard from business owners the problems they face in deciding how to grow their business. They often look for help from consultants and friends to help put together a framework that will guide them in making business strategies.
What happens if a small business does not adopt a growth strategy?
Data suggests that when it comes to looking for small business growth strategies, almost 20% of these businesses have failed to thrive in their first years, and only one-third have survived past the 10-year mark.
I have also done some research with my small business owner friends and have recorded some information here that will be useful for readers to understand small business failures.
While these numbers are gloomy, they also offer some optimism at the same time. Although owning a small business involves a fair amount of risk, there are several growth strategies to increase the chances of success.
To make it easier for small business owners, here I have curated a list of small business growth strategies to get new customers and grow businesses that are picked out by some of the best business growth experts.
So, What Is a Growth Strategy for a Small Business?
A growth strategy for a small business is essentially an action plan that the owners use to increase the market share of the business systematically.
For instance, when I was working towards my own company’s expansion plan as a part of my role as the head of go-to-market strategy, a market growth strategy was key to my approach. It enabled me to work on a systematic path to business expansion, considering all key factors, such as the industry, sector, finances, and the target market.
Most growth strategies for small business, including the 4 growth strategies of Ansoff Matrix for business growth, summarises key strategies employed by most companies (discussed in the next section).
Ansoff Matrix is a popular strategic framework for decision-makers, business owners, entrepreneurs, and business managers, especially those tasked with evaluating opportunities for business growth.
Top Growth Strategies for Small Business Owners
In this section, I am going to explain each of the key growth strategies and how to use them in the strategic planning process.
Market Development
As the term indicates, this growth strategy involves taking the existing product to an untapped market.
I believe that this is the most important growth strategy for small businesses. I believe so because this allows us to sell to new customers that are an ideal fit for our already-developed product line.
When I was working towards growing my own business, this approach allowed me to target suitable segments for expansion, such as a new demographic, industry, or department.
A few examples of market development strategies here could be:
- Expanding into newer markets, adjacent county or a neighbouring city
- Franchising or licensing your product or intellectual property
- Use of various new sales channels like partners, online, print, and social media
Market Penetration
When your business is in its initial stage of growth and development, market penetration is something that you truly need to focus on.
Market penetration simply means acquiring as many customers as possible within the defined customer profile that works for your business, in your specified geographic area.
I made use of this strategy while taking one of our offerings to market, I used all possible channels, offline, online and building product adjacencies to ensure that my target customer comes only to me and no one else.
The idea that I worked on rigorously was to build more market share by selling existing products or launching new products to attract customers. A few of the things that I did here include-
- Take the Business Online
Selling products or services on the Internet is one of the best ways to improve the efficiency and productivity of a business. It helped me to both reduce costs and better communicate with my customers and suppliers.
- Product Improvement
Another thing that I focused on was constant improvement of the product and its post sales service for my business growth. I started by taking customer feedback on what products customers are buying, what they like about it, what changes they prefer, and making changes according to them.
Some other possible examples of how you can approach market penetration are-
- Offering incentives for people to buy more of the product, bundling and upselling
- Being aggressive with marketing but in the same customer segment
- Changing pricing strategy as per market demand
Market Segmentation
This is another important business growth strategy that divides a market into various segments, such as geography, market behavior, demographics, or customer behavior.
I believe this strategy can be especially helpful for small businesses operating in a cluttered market filled with bigger competitors. For businesses offering more than one product, market segmentation is a strategy that also helps to advertise different items to different consumers and organically increase sales.
Personally, market segmentation allowed me to identify and focus on a specific sector that my competitors have not successfully reached. This is one thing that makes or breaks your initiatl success.
If you have identified a specific set of customers to serve, you need to have a sufficiently large customer base acquired known as a minimum viable market (or audience) who can be your regular patrons that can sustain your business.
Product Expansion
Having a robust product development plan in place is another strategy that can help small business owners grow by leaps and bounds.
The strategy involves both developing new products and modifying the existing products/services to make them appear fresh and meet the current market demands.
A few of the things that helped me while developing a product development plan for my business include-
- Developing a New Product
To create or develop a new product, the areas that I focused on the most include:
- Research and development
- Assessing customer demands
- Creating design documentation of the product
- Prototyping
- Getting feedback from customers before going into production
- Prioritizing Brand Extension
Another important thing to do under product development is to focus on brand extension, which may include-
- Making use of the existing brand in a different product category
- Branding the original product category in a recreated form
Diversification
Diversification is one of the most risky of all possible growth strategies. The process involves selling new products to new markets. The risk that comes with this stage of business growth lies in the lack of familiarity with either the product or the market.
Irrespective of this, diversifying can often lead to substantial gains for the business.
One interestingly important thing I noted was that a diversification strategy can either be related or unrelated. Related diversification primarily means that a company stays within a known/familiar market or extends its offerings while keeping common similarities.
Unrelated diversification is the riskier of the two types and happens when a company extends into an industry or market they have zero experience. This also tends to constrain the resources of the small business owner and divert mental bandwidth.
Since developing new products for new markets is the most risky strategy, as the company would be entering into new areas for both product and market, I recommend carrying out this strategy as a supplement to the existing core business.
To diversify successfully, it is also best to identify relevant sales opportunities, listen to business-related news, and accordingly think about the ideal way to move forward with market development to both interest potential customers and boost sales.
Case Studies- Top Examples of Growing a Small Business Successfully
In this section, we will look at a few small business strategy examples of successful growth.
Etsy
Etsy is an excellent example of small business growth that began as a simple online marketplace for vintage and handmade goods.
The company primarily focused on effective product development and market penetration strategies to grow its user base and brand awareness substantially. The company is now a global e-commerce marketplace with millions of buyers and sellers.
Facebook needs no introduction today. However, when it was launched in 2004, it was just one of several social media networks.
To reach where it is today, the company used a market penetration growth strategy. Facebook started this journey by exclusively focusing on a niche or small target customer base and flowed by expanding the brand gradually.
BrewDog
BrewDog started as a small brewery in Scotland. The company focused on implementing a proper strategy for market expansion strategy targeted new geographical markets other than the UK.
Apart from this, they also leveraged social media platforms and crowdfunding as the specialized techniques for growth. The unique thought and innovative approach is something that has turned BrewDog into a popular as well as global brand today.
Regardless of the type, no one can argue that growth strategies are crucial for all businesses. Without a growth strategy, the business only reacts to changing market conditions and is not truly prepared to grow sustainably.
However, as I am sure you know, strategically growing a small business requires a lot of detailed planning and hard work. In the end, I think it is important to remember that the process of developing and implementing a growth strategy for a small business is continuous and dynamic.
Personally, what has helped me the most the business I am part of is the flexibility in approach, monitoring the progress consistently and adjusting business strategies as per the evolving demands of the business.
The growth strategies that I have shared above are well-proven to help small businesses overcome their lack of access to resources and create long-term value generation for their customers.
The key here is to implement the chosen growth strategies well, use the actionable steps, and consistently measure results to ensure that you are on the right path.
Once you have chosen the strategies that are useful for you, you can look at how fast your business should be growing depending on the Industry you are in. You can find a detailed study here.