Growth in a business is essential. How much growth, depends on your vision for your business….
Many business owners often confuse growth with expansion. Expansion is moving into new product lines, new services and new areas. Growth is increasing your capacity to continue with the products and services you have. Growth may require expansion, but expansion is not necessarily needed for growth.
Growth is necessary, at the very least, to ensure that your business maintains a healthy profit margin. Expenses typically rise each year and, as such, your business needs to grow, otherwise it will ‘fade’ away.
This is why having a business plan and regularly reviewing your businesses performance is so important! Understanding the businesses financial bottom line and how the target markets are evolving is paramount to ongoing business success and growth.
Be Honest With Yourself…
Sometimes, the largest obstacle any small business owner can have, is themselves. Far too often, we as business owners fall prey to own success and we ignore the change indicators in our market. A wise business owner will ensure that they can independently evaluate their business – a business mentor is great for this kind of oversight.
Be brutal in your assessment – really extrapolate the possible changes in your market and determine how you can refine your business strategies to capitalize on the changes.
In one of my ‘previous business lives’, I ran a retail franchise store. We were a very niche business and when we first opened the stores, we did really well. However, as the market evolved it became more of a consumer market (not niche) and our Franchise did not change it’s strategies to take this into consideration. That franchise no longer exists – it was placed in receivership.
There are several strategies for growth that may be applied by a business owner.
Sell More Of The Same Thing
This is possibly one of the most popular strategies for business growth – do more of what you’re already doing.
This could be a valid approach, particularly if the business or market is relatively young.
One of the biggest things to consider here, is whether there is ‘room’ to do more of the same thing. If your business delivers services, can your existing staffing levels handle more work and if not, can more people be employed quickly enough to deliver the work?
Does your market allow for enough growth in the sale of more of the same? Sometimes, the market is near saturation and selling more of the same thing is not going to provide enough growth for a business.
Consider moving into other target markets with the same product or service. Often this will require a rethink of Unique Selling Proposition, but it can reap big rewards.
If the business doesn’t have sufficient person power to sell more, consider options like licensing and franchising to increase the reach. One very simple method to immediately add more sales people to the business is to offer an Affiliate or Referral program, where the business will pay a commission or referral fee to people who bring in new business.
Raising the prices of your products and services may result in growth. This approach needs to be implemented carefully, and the results monitored regularly.
Raising prices will, generally, result in a higher profit per sale – and as such higher profit overall.
In some cases, raising prices will result in an increase in sales as well. This tends to occur when the price of a product or service is so low that it gives the perception of a low value / poor quality or appeals to a target market that is not willing to spend money. When the price is increased, the target audience feels that the quality is much better and will more readily invest. By increasing the price and increasing sales, growth occurs naturally.
I experienced exactly this in my retail store – we had priced a product at less than $10, which we thought was an ‘irresistible price’. Unfortunately, our customers did not and the product was not moving. After overhearing several customers discuss that they believed something must be wrong with the product for it to be so cheap, we increased the price to $14.95 and sold out in a week! Perceived Value.
Diversification is a valid and very smart business growth strategy. Add more products or services to your business portfolio.
Depending on your business plan, the products or services may be related to your existing product range or, it may be appropriate to start a new ‘arm’ to your business.
Diversification, as a business growth strategy, provides a major benefit as the risk of market downturns is spread over a wider base.
By adding more related products and services to its portfolio, a business can also capitalize on return business from existing customers.
These are three very broad ways to grow your business – and which one(s) to use will depend on your business plan.