How to Develop Growth Strategies For Small BusinessesMay 5, 2022 2022-05-05 17:19
How to Develop Growth Strategies For Small Businesses
Small businesses are always looking to progress. That is why they try to plan growth strategies for their current and future targets. Every development relating to the growth of small businesses usually starts from increasing your reach with customers.
Many businesses fail due to a lack of planning for their business. As entrepreneurs, the aims and targets of your businesses must be set. To do that, you have to develop growth strategies for your small businesses.
In this article, I will discuss some important points on developing growth strategies for small businesses.
Firstly, let us define the phrase ‘Growth strategy.
Table of Content
- What is a Growth Strategy?
- 6 Ways to Develop Growth Strategies for Small Businesses
- Frequently Asked Questions and Answers
- Watch How To Develop A Growth Strategy For Your Business
What is a Growth Strategy?
A Growth strategy refers to the plan of a company relating to tackling its future challenges. It also involves their problem-solving solutions to current situations and challenges.
Examples of growth strategies may be increasing sales income, developing products, and improving customers’ services.
The main growth strategies for small businesses include market penetration, market development, product development, and diversification. These strategies are core to developing a small business today. In the next section, I will discuss each of these strategies and more.
6 Ways to Develop Growth Strategies for Small Businesses
The 6 growth strategies for small businesses include;
- Increase market penetration
- Market development
- Product Expansion
- Create alternative Channels/Diversification
- Market Segmentation
So, I will discuss each of these growth strategies here;
1. Increase Market Penetration
The market for small businesses is very competitive; this strategy must be taken seriously. Market penetration involves increasing the market awareness of a particular product or service. This product or service might either be a new one or an existing one. Adopting a market penetration technique is one of the first ways to grow small businesses.
There are many ways to implement or execute this strategy effectively. Market penetration can be implemented effectively by putting efforts into promotion.
Advertisements, brand awareness, offering discounts, and price reductions can create attraction for your products. These strategies are one of the best ways to spread the tentacles of your business.
Another effective way that also helps this course is creating a new product for customers. However, you can also make your previous products more attractive to get the same results. So, if you are a small business owner, you must use this plan as the first step to making any progress in your business.
2. Market Development
Another vital growth strategy that all small business owners must adopt is market development. Usually, a business aims to promote products to customers to make more sales within a market. Market development aims at extending the services of your business to other categories and geographical locations.
Businesses may sometimes fail to penetrate the market for a particular service. This strategy looks to develop your business when you fail to make new customers.
Moving your business to a different geographical location is an effective way of implementing this plan. Market development can also work by creating products that have a similar market to your previous one.
Sometimes, small businesses might not have the capital to expand to a different location. However, offering g similar service to the one you have can provide the same result. A good example of this strategy is a restaurant owner adding private catering to his services.
3. Product Expansion
Product development is a great way to grow your small business. This technique can be used by individuals, entrepreneurs, or even large companies. Expanding your product is the best way to lift your business from a slump. If your business is experiencing a drop in sales, this strategy would be a good idea.
Product expansion can be implemented by getting new features to your existing products. These features would make the product more attractive than the initial one. As a result, it would attract new customers and more sales.
Another way of product expansion is by buying rights from different companies to create another person’s products. Branding would also be essential in this plan. Partnership with the other company would result in a better result.
However, trying to execute this plan, you must do your research. Research before execution would make sure that you avoid failure.
4. Create Alternative Channel/Diversification
It is important to have a channel where most of your sales come from; most businesses have this channel. But is it also essential to diversify where your customers are coming from; that is an aspect where some small businesses and entrepreneurs fail to leverage.
If you have a small business online, it will bring greater results to take your business offline. For instance, if you sell products online, opening a physical store and diversifying your market source would be important.
On the other hand, having only a physical store would not be enough to grow your business in this present age. Taking your business online would be an amazing way of creating an alternative channel. The most effective marketing techniques for small businesses online are Email marketing, social media, and creating a website.
The need to create a new channel can not be overemphasized. It helps you boost your sales enables you to expand your business. One of the vital aspects that a small business or entrepreneur needs are alternative channels to their markets.
5. Market Segmentation
Market segmentation is also one of the most important growth strategies for small businesses. Companies, entrepreneurs, individuals, and small businesses are prone to suffer from a dip caused by a crowded market. Employing the market segmentation strategy is the most effective way of staying relevant amidst rivals and competition.
This growth strategy aims to divide your business into segments that can help you reach a more specific target audience.
If you have a business struggling to beat larger rival companies, market segmentation will help you narrow your market to different groups. This plan can be executed by researching and dividing your businesses into categories.
Market segmentation can be executed with research on how your products perform with certain demographics. Geographic location, customers behaviors, and psychology can make you easily categorize your business.
Online businesses can also employ this technique with email marketing and social media targeting.
6. Good Partnership
Finding great partnerships in small businesses is essential. However, it takes a good understanding of your plan to find the right partners. The partnership is a driving force in any small business or company.
This partnership can be reached from mergers, acquisition of shares or percentages, or partnering with other businesses. Nevertheless, finding the right partnership is important. That is because it helps both parties join forces to reach a given goal.
The right partnership has to favor both parties rather than being one-sided. The partnership also increases your resources for the projects and helps with commercialization.
There are other advantages that business partnerships can provide to small businesses today. So, if you are looking to grow your small business, then employ this strategy in your plan.
However, finding the right business partner would require a lot of research and case studies on various businesses.
Keep your long term customers
One important aspect of business that small businesses seem to forget is keeping existing customers. Most companies focus more on attracting new customers than retaining the existing ones.
To execute this strategy, you have to employ the 80-20 rule. This rule focuses on getting 80% of your income from 20% of your customers. The principle encourages that you maintain your best-paying customers on a long-term basis.
This rule is very popular with businesses today, known as the Pareto principle.
If you want to develop growth strategies for small businesses, the six methods above would be very helpful.
Do you have any questions about the topic? Check out the Frequently Asked Questions and Answers section below
Frequently Asked Questions and Answers
What is a possible growth strategy for a small business?
There are various growth strategies that you can execute for your small business. A few of them include branding, advertisements, sales packaging, and offering discounts. You can also reduce prices on large orders from customers. Loyal customers could also get rewards such as discount offers, coupon codes, etc.
What are the 5 P’s of growth strategies for small businesses?
If you are a small business, you need to execute your strategies by following the 5 P’s of growth strategy. They are plan, ploy, pattern, position, and perspective.
What are the five stages of strategy development?
The stages of developing a strategy are setting goals, formation analysis, strategy implementation, and monitoring.
What is the 80-20 rule in marketing?
The 80-20 rule, also known as the Pareto principle, is a marketing principle. It states that 80% of the effect of your actions comes from 20% of the cause. This rule is also used in other areas and industries.
Watch How To Develop A Growth Strategy For Your Business
Developing growth strategies for small businesses is essential for any businessperson, entrepreneur, or company. There are various ways you can execute these growth strategies for your business.
However, the first step towards progress is by increasing your market reach. It is the main concept behind market penetration in any business. Creating new products or offering new services can also be helpful for many companies.
Other strategies like market segmentation, product expansion, and diversification can go a long way in enhancing growth.
As I mentioned above, finding the right partnership would be great for both parties in any business. It helps increase the resources, workforce, skills, brand awareness, and other things required to build a project.
Lastly, adopting the Pareto principle has always been effective for businesses, entrepreneurs, and companies. It would provide a great result if you adopt this technique in your industry.
So, that’s it! Everything you need to know about developing growth strategies for small businesses. You can execute these strategies with the information covered in this article.
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Originally posted 2022-02-11 01:34:26.