To “grow” is arguably the objective of all small businesses, but growth can have different meanings for different businesses.
For one business, growth might mean an increase in social media followers, for others, only the number of actual, purchasing customers, matters.
Nevertheless, business growth ultimately means an increase in the business’s capabilities to generate sales or revenue.
When stagnated, small businesses will sooner or later face new and/or stronger competitions, and in the end, won’t be able to compete. It is crucial for all small businesses to have a working business growth strategy.
Business growth can be achieved in many different ways, and specific strategies might suit one business better than others depending on various different factors.
With that being said, here we will discuss the top business growth strategies you can use to grow your small business. You can also combine different strategies depending on your business model to accelerate your small business’s growth for long-term success.
Without further ado, let us begin.
1. Market Penetration
The idea behind market penetration is very simple, and so it is considered the most basic of all business growth strategies: simply sell more of the business’s current product or service to its existing customer base.
In short, the aim is to increase the market share of the existing product or service.
For example, if an average customer purchased 10 bottles of Coca-Cola a week, what can we do so they will purchase more? A common tactic is to sell a 12-pack for a cheaper price.
There are various approaches we can use for this strategy:
- Improve the product/service’s quality
- Heavily advertising the product to generate more sales
- Simply lowering prices compared to the competitors’ products
- Bundling products into attractive packages
- Discounts on larger orders
Basically, however, this strategy is about improving your product’s value, either by selling your product for a cheaper price or by offering more with the same price.
If you can’t directly improve the product/service’s quality to increase value, you can use other approaches to make the product more attractive, for example by bundling them with other products in an attractively priced package.
2. Market Development
In market development (or expansion) you are selling existing products or services to new customers. The most common approach in this strategy is to launch the product/service in a new geographical location.
You can consider this strategy when you feel that market penetration is no longer effective/possible in your area, for example when your usual market has been saturated so you’re struggling to generate more sales in your current area.
The ideal goal of the market development strategy is to expand into international markets just like Apple or Starbucks, but as a small business, you can start small. Even opening a small kiosk a few blocks away from your current store can be considered as a valid market development strategy.
You can also be creative, and opening a new location is not the only available tactic in this category. For instance, if you are a restaurant business, you can consider catering to target new customers.
Direct-to-consumer businesses can also consider selling their products/services to other businesses as a B2B business when possible. With the same example, a restaurant can offer private catering for nearby offices and businesses.
3. Product Development
Product development, or product expansion, is about developing new products or services, expanding the business’s product lines to generate more sales from both existing and new customers.
In some cases, you don’t really need to develop a new product from the ground up, and you can simply add new features to existing products. Updating older products can also attract your previous buyers to make another purchase. For example, Apple and Samsung release new models of their flagship phones each year. This practice refreshes the interest of previous customers and may also attract new customers.
Coca-Cola is another example, which throughout the years has successfully launched new products like Cherry Coke and Coke Zero to refresh their consumers’ interests and at the same time expanded its market to new customers.
How can small businesses use this strategy? While probably you don’t have the expensive R&D budgets of these giant enterprises, there are always ways you can use to improve your existing products or services.
4. Alternative Channels
In this growth strategy, you aim to attract both existing and new customers with different channels. The most common way is to expand in online channels to amplify the business’s reach in the digital world.
Restaurants, for example, can explore this strategy by making themselves available on various on-demand food delivery services, and physical stores can launch a website and an eCommerce store. Platforms like Shopify have made it easier for businesses to launch eCommerce stores without any programming knowledge.
Similarly, service-based businesses can allow online reservations/booking by integrating online booking and scheduling systems.
You can also start exploring online advertising channels like Google Ads and Facebook Ads to attract more customers.
In some cases, cooperating with other businesses can be the best way to grow your small business. For example, restaurants can build partnerships with local tour agents to promote each other’s services to existing clients. However, partnerships can also develop to more long-term commitments like acquisitions and mergers.
By partnering with the right business, you can create a win-win situation and amplify both businesses’ growth rates.
Partnerships are especially suitable for businesses that can share clients (like the restaurants and travel agents example above) or businesses that can collaborate together to execute more complex projects (i.e. carpenters with electricians).
Having a solid business growth strategy is crucial for any small business, whatever the niche you’re in.
Keep in mind, however, that every business is unique, and no business strategy is the same. It’s crucial to identify the specific type of strategy (or combination of strategies) that will work for your small business and make adjustments according to your available resources.