Did you know that 150,000 new small businesses open in Canada every year? Did you also know that only a fifth of those new small businesses will succeed?
It may seem obvious, but every business owner wants to see their business succeed, and that can only be accomplished with an effective growth strategy set in place.
How do you know how to build a custom growth strategy for your particular business and goals? Whatever your goals and motivations are, it’s important to understand the basics of growth strategies and what business professionals have been relying on for years.
When you start by learning and identifying where companies went right, you can start implementing these growth strategies to your business in 2020 to attract new customers, increase sales revenue, gaining a valuable reputation, and more.
What Exactly Is A Growth Strategy?
Think of growth strategies as techniques. Each one is a little bit different than the other and, depending on what type of new business you have and what you want to achieve, your particular growth strategy will vary. But one thing is for sure – with a concrete business growth strategy in place, your new small business is sure to succeed.
What Are The Four Major Growth Strategies?
When you start searching for growth strategies that are best for your business, you’ve probably come across The Ansoff Matrix, developed by Harry Igor Ansoff, a very successful, respected and highly-educated Russian-American mathematician and business manager. He’s known worldwide for this strategic planning tool that was developed in 1957 to help businesses grow using current products or new products in a current market or new market, each technique providing their own set of risks and advantages.
Market Penetration
This is one of the least risky growth strategies of the major four. In this market strategy, the aim is to increase sales of current products by expanding into a new market or utilizing the existing market. In other words, this market strategy is a great opportunity to expand your service area into other regions or countries, introduce your products to industrial buyers rather than just households (price decrease), and by entering the foreign market.
Examples of Market Penetration
Netflix and Amazon Prime. They’re in the same market and are always looking to attract new views by advertising the latest movies or TV shows to watch. They offer different payment plans and screen options for families and students.
Nike and Underarmour. They both produce new athletic clothing for males and females consistently while using the faces of successful and largely followed athletes in ads and on billboards to increase sales of a certain product or line.
Market Development
This market strategy involves introducing your business’s existing products and services to an unexplored new market to develop a new customer base. The goal is the same as above: increase your sales by reaching a larger audience. Once the new target audience is determined, the next step is to create a promotion strategy to successfully enter new markets, for example, with the help of digital and visual marketers.
Examples of Market Development
Facebook, the King of Social Media. It started out as a small company just like yours. They had to study how users were using their platform in order to develop new ideas and ways to attract more people to it. They took multiple steps in the right direction:
- Introducing an app for easy accessibility for mobile users
- Allowing ads for users to find precisely what they’re looking for or are interested in
- Creating a messenger app for easy communication between friends, family, businesses and customers
Product Development
This third growth strategy is a little different. Before diving into a current market, new products or services are developed and introduced to your customers. This can be done in a few different ways:
- Investing in the development of new products
- Obtaining the rights to produce someone else’s products
- Joint development with another company
- Buying in on a product and labelling it as own
Product development examples could include fast food companies, the medical industry, or the automobile industry.
Diversification
This is the riskiest of the four major business growth strategies, but with great risks come great rewards.
You’ve probably guessed what this growth strategy entails and how it’s different from the others. Diversification is developing and introducing new products to unknown new markets. It can be broken down into three categories:
- Concentric Diversification: when a company adds similar products or services to their business
- Horizontal Diversification: when a company introduces new and unrelated products or services
- Conglomerate Diversification: when a company introduces new and unrelated products or services that may attract new customers
How Can I Make My Small Business Grow Faster?
The above growth strategies obviously aren’t immediate. They’ll be long-term investments, so in the meantime, if you want to grow your company quickly, it may be time to assess the following factors:
Assess Competition
The number one thing that you need to thoroughly research before introducing any new product (or even when it comes to social media) is your competition. What are they doing to make them succeed in new markets? Why are customers attracted to them? How do their prices compare to yours? Who is their audience? By understanding their strengths and weaknesses, this can really help you determine how you should structure your personal growth strategy and marketing campaign.
Assess Your Team
Take a look at your team. How could you better yourselves? What is your company missing? Sure, one of the ways you’re going to succeed is by gaining new customers, but company growth relies heavily on your team. By investing in a variety of talent and skill sets, you’re investing in the success of your company right off the bat. Establishing a strong, loyal and hardworking team can also improve customer trust and interest in your company.
Assess Your Audience
While assessing your competition is certainly one of the most important factors to consider, so is assessing your audience. If you don’t know who you’re targeting or who your recurring customers are, your growth strategy isn’t going to work, no matter which technique you use. After all, your audience is the one helping you figure out what to produce in the first place and what they want more of. And, not only is it important to know your audience, but it’s also crucial to be able to connect with them. When your audience sees your effort being put into getting to know them and introducing new products that they’ve asked for, your conversion rates and customer loyalty ratings are sure to increase.
Set Realistic Goals
One of the mistakes that many small business owners make is getting ahead of themselves. It may seem hard to look at the little picture because you want to succeed immediately, but setting realistic short-term goals (that will eventually turn into long-term goals) is the key to ensuring your success one step at a time. By setting small goals and accomplishing them, you’ll find your motivation and determination driving you and your team more than ever. When you achieve a goal, make sure to reward yourself and your team – you deserve it. Mark it on the calendar too and make it public so everyone can see how dedicated you are. Remember, even small feats are worth celebrating.
Develop Your Growth Strategy Today
It’s unfortunate that so many new businesses don’t make it in Canada, but your company can succeed when you put in the hard work and develop a growth strategy that’s going to work best for your particular goals, products and services. In 1957, a business manager, Harry Igor Ansoff introduced the world to four major growth strategies that have helped many businesses all over the world reach impressive heights – Market Penetration, Market Development, Product Development, and Diversification.
Though each strategy has its own risks involved, you’ll also be rewarded with the long-lasting advantages. Don’t let the statistics scare you. Your company can make it with the right growth strategy, strong team, and strong audience backing you up.
