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. There’s getting ahead of your competition, raising brand awareness and getting your name out there, getting people to believe in your product or service … where do you start? 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.
1. 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 Under Armor. 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.
2. 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
3. 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.
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 snd 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: