Every business starts small but a lot of them stay there.
Starting out a business isn’t easy but turning it into a big one is way more difficult. As we know from the statistics, the situation is dire. Research suggests that only one-tenth of 1 percent of companies will ever reach $250 million in annual revenue. An even smaller number of companies just 0.036 percent, will reach $1 billion in annual sales.
However there are companies out there who have made it the transition from start-up to small business to immensely successful corporate giants. But how did they do it? By following one or more business growth strategies.
Most small companies have the potential to grow their businesses, increase sales and profits by implementing certain business growth methods. Business growth strategies do not come as a cookie-cutter and definitely cannot be applied as such to every company; it is not a one-size-fits-all solution and is largely dependent upon a company’s financial situation, their competition and even government regulations.
Some common growth strategies that successful companies have employed include market penetration, market expansion, product expansion, diversification and acquisition.
The least risky growth strategy for any company is to use market penetration that is to market its existing products within the same market, to sell to existing customers. The right way to go about penetrating a market is to increase your market share. You can do so by lowering the price of your products and that will attract a lot more customers or will sell out a lot more units than before.
The next step to growth strategy is to expand your market, move out of your current market and start offering your products to an adjacent market may be in a neighbouring city or country. There are several reasons behind market expansion. One, your current market is saturated, the competition is high and there is little to no room left to grow beyond that point. Two, your product might have an unlikely potential market and customers outside your current market and you need to explore that.
This is a classic growth strategy that almost every small company employs. Product expansion involves developing new products or improving the existing products may be by adding new features and selling them either to the existing market or to a new one. This strategy becomes inevitable when technology changes and your older products start becoming outdated and a need for better, improved versions is demanded by customers.
One of the risky growth strategies include diversification, where a small company creates new products to sell to new markets. The risk is double here, firstly the new market is probably not familiar with your company and has most probably never experienced any of your products, secondly you have no idea if the new products will sit well with them or not and if the new customers will even take interest in them. Therefore marketing research prior to execute this strategy is crucial.
Small companies can also grow and implement a growth strategy to your business by acquiring another business that might be their competition, a supplier or a retailer. This strategy though risky is not as unsafe as diversification mainly because the company to be acquired has already established its products, a customer base and a market value.
While implementing a growth strategy your company must know exactly what it wants to achieve. Market research prior to any growth strategy execution is always helpful.
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