What are business growth strategies?

As a company, growth is your cherished goal. Every business wants to expand and mark its presence in a big way. Your company may start small, but that doesn’t mean it should stay small. Business growth has its dynamics and methods.

Therefore, in this article, we will explore some of the proven techniques and strategies that can help your organization progress and stand out.

What is business growth?

There is no agreed-upon academic business growth definition.

There are various metrics or criteria to measure growth in a company.

Again, there is no standard metric here; rather, we look at a combination of metrics to measure growth.

RELATED: 8 IMPORTANT POINTERS TO REMEMBER TO HAVE A SUCCESSFUL BUSINESS

Some of the common and popular measures can be;

• Increased sales/revenue
• Increased profit
• Increase in the number of employees
• Increase in the number of clients
• Also, the increase in the number of sales outlets/production facilities
• Increase in the number of products etc.

We can add more to the list, depending on the nature of the business.

Therefore, in simple words, growth happens when you have more cash at your disposal, and you think of adding more value to your enterprise through or due to any of the above methods.

Factors of business growth:

The growth in your small business depends on some factors.

Before you embark on any strategy of business growth, you need to check all these factors.

Make sure these are available and are at your disposal.

The presence of these factors will fuel your growth.

Resources:

We can divide the resources into the following four sub-categories;

• Financial resources
• Human resources
• Business resources
• System resources

We will discuss each of them briefly below;

Financial resources

There should be adequate funds at your disposal before you undertake any business growth strategy.

Depending on the nature of your expansion plan, it sometimes takes time to materialize and bear fruits.

So, you have to make sure that you have enough cash to go through that period smoothly.

Your financial resources also imply your power to borrow funds.

Borrowing is an important pillar of your business growth.

Banks and creditors do not lend to every tom, dick, and harry.

So, if your plan for growth is solid and actionable, you can expect money from lenders, even your small business.

So, do your homework diligently and then proceed accordingly.

Human resources

Human resources are as important for business development as financial resources, so they can rank on a notch higher as human resources will expend the financial resources.

A company cannot survive without a competent workforce.

Your personnel should be the right persons for the right jobs.

If you think you do not have sufficient manpower in your company, you hire new people before going for any growth strategy.

Besides, if there is no one to handle the expected workload, what is the point of getting it?

It is equally important that your human resources know their jobs very well, and if you think they lack in necessary skills, then train them or hire fresh blood that is well-versed with the trends of the time.

Human resources are key to any growth strategy.

Business resources

Business resources mean your company’s standing and reputation in the market.

For your business development, so it is very important to assess the worth of your goodwill in the market.

In addition, you should evaluate your organization’s customer relationship, supplier relation, market share, supply chain management, production facilities, etc.

The benefit of this exercise is that a comprehensive growth strategy could evolve, so which is in line with your business development model and has a better chance of success.

System resources

System resources mean the planning, control, and also, information system of your company—the level of their sophistication and their constraints.

The system resources of your company define your strengths as well as your weaknesses.

The selection of the right plan for your business’s growth depends on the quality of your company’s system resources.

After resources, the other factors related to the owner of the business.

We can summarize that below;

Personal goals of the owner

If the owner of the organization is not growth-oriented, then the scope of business development gets rather limited.

It is the owner who will spearhead the growth of the company and oversee the policy for progress.

Sometimes, the owner has other plans regarding his business, maybe he just wants to achieve some short term goals (retiring a debt, perhaps) and then shut down the company.

So, the growth should align with the personal goals of the owner.

Capabilities of the owner

Business development is directly proportional to the personal competence and skills of the owner.

He should have great managerial, business development, administrative and operational abilities.

Therefore the growth in his small company will depend on how much effort the owner puts in and how much more he is willing to put in.

Transforming your company from a small business into a large company is not easy.

Statistics show that only 1 percent of 1/10th of the companies ever reach annual revenue of US$250 million.

An owner has a great part to play if he wants to climb the ladder of success.

Business growth strategies:

Also, having discussed what business growth is and the important factors for growth, we now focus our attention on actual growth strategies.

In order to make progress and expand commercially, you, first of all, have to design a growth-oriented strategy.

It should identify the business growth stages and spell out how you will go about achieving the goals defined in your policy.

Usually, there are two types of business growth strategies;

• Integrative business growth strategies
• Intensive business growth strategies

Let’s discuss them one by one.

Integrative business growth strategies:

An integrative growth strategy is when a company expands or grows through horizontal, vertical, forward, conglomerate, and concentric integration.

Let’s discuss these concepts one by one for better understanding;

Horizontal integration

Horizontal integration is what acquisition and merger are all about.

These are among the time-tested business growth strategies.

Always remain alert regarding your competitors.

You should be mindful of their business.

If anyone shows signs of weakness, you can offer him to merge with you or acquire it right away.

In this way, your enterprise will get a major jump in revenue and market share.

Of course, you must have adequate financial resources to carry out this task.

Vertical integration

Vertical integration happens when a company buys its suppliers.

It is a backward integrative growth strategy.

Also, will reduce your dependence on your suppliers, as you will be able to control your supplies.

It will be part of your enterprise now, and also you will reduce your cost as the supplier’s profit would get eliminated.

All these factors would contribute to the growth of your company.

Forward integration

Forward integration means buying businesses and companies that are part of your distribution and selling processes.

For example, you can buy a company that transports your goods to the sales points.

Or you can buy the sales outlets that sell your products and start selling to the customers directly without involving any third party in between.

These are part of the growth strategies as they will reduce your operational cost costs, which will hopefully fuel sales and make your organization grow.

Conglomerate integration

It is also called a takeover.

When a company acquires another company and makes it a part of itself without compromising its original identity, it is called takeover or conglomerate integration.

The purpose of this exercise is to increase the foothold in the market.

The acquiring company will get a new business to show off as part of its family.

This will add to its’ revenue stream and trigger growth in the organization.

Concentric integration

Concentric integration is a merger between two different companies that are selling similar or relatable products.

For example, a jeans manufacturing factory merging with underwear manufacturing factory.

This would be a case of concentric integration.

Intensive growth strategies:

Now we talk about intensive growth strategies.

There are many intensive growth strategies that you can employ the grow your business.

Some of the more popular ones are below;

Increase your market share

The most basic, least risky, and logical business growth is to increase the sale of your current product or service.

It is also known as market penetration.

You employ all your current human and financial resources towards attaining more and more sales of your current portfolio of products and services.

The resultant increase can enhance your growth.

Find new markets

The next strategy for the growth of a small business can be finding new markets to sell your products.

This could be anything like exploring a new city, a new state/province, or even another country.

In this increasingly connected digital world, selling products outside your country’s geographical confines is no big deal.

Remember, real growth lies outside of your comfort zone.

Find new ways to sell

This is another growth strategy that holds special significance in today’s world.

More and more customers are turning online to buy things they want.

RELATED: LIST OF THE BEST ONLINE SHOPPING SITES IN NIGERIA

If your business is not selling online, it is losing out on a major chunk of revenues.

If it is already selling online, then try techniques like SEO, digital marketing, etc. to give your online sales a major boost.

New products

Yet another strategy for growth can be adding new products or services to your existing portfolio.

Sometimes new products give your sales the kick they require, and even the old ones start giving better figures.

For launching new products, you must do your homework well and launch such a product that the customers need.

You should have the financial and human resources at hand, too, to perform this task.

New customers

Similar to new products, new customers should also form part of your business growth plan.

For new customers, you can develop exclusive new products keeping in mind their specific needs.

You can target them for some niche products and offer them your existing product line too.

In this way, you will have customers for both your new and old products.

Smart marketing campaigns

A tailor-made marketing campaign for a specific clientele is one of the most effective business growth strategies.

Customers hate generic ads that offer them nothing specific.

A highly targeted marketing campaign can do wonders for your small business.

You can experience growth in your revenue.

The use of online digital mediums has made it quite possible to target a specific group for the ad campaign.

Make use of it and see your business grow.

Diversification

You can diversify the following;

• Products
• Customers
• Suppliers

We now take a look at each of them briefly.

• Products: By diversifying your product range, you are offering customers variety and choice. Today’s customers love it. You are also offering them different products, and they don’t have to go to other sellers to get what they want. For example, if you are selling ladies’ garments, how about adding kids’ clothes? Women who come to buy their clothes can buy kids’ garments too. This will give your business a chance for growth.
• Customers: Even if you are getting regular orders from a fixed number of clients, do not remain stuck with them. Customers can slip away at any time, no matter how loyal they appear. So it is advisable to keep hunting for new customers and explore new opportunities to expand your customer base, thereby increasing the chances of growth.
• Suppliers: By suppliers, we mean those supply you the products that you sell or if you are a manufacturer of the raw material that you use to make products. By diversifying your range of suppliers, you can expect better prices and more favorable terms of sale. Otherwise, you can be a hostage to the suppliers’ whims and demands.

Play with a price

Sometimes the impediments to our growth plans are right under our nose, yet we fail to recognize them.

Price is one such factor.

Try lowering your price and see what effect it has on your sales.

If the response is positive, then you can reduce the price permanently.

It is a simple yet very effective growth strategy.

Look at the competitors

If your competitor is thriving in the market and is losing out, you need to observe your competitor’s system despite offering similar products.

You should check out his strategy, how he is running things, and compare it with yours.

You can steal his idea or strategy, adjust it to your realities, and see what benefits it brings to you.

If your organization experiences growth might as well adopt it for good.

Partnership

A partnership is another popular strategy for business growth.

You have to be on your guard while establishing a partnership, though, and extract maximum benefits for yourself and your business.

The new partnership will bring in more capital, better skills, or experience to the table.

This will enhance the growth potential of the business considerably.

Find your USP

A growth strategy that should part of your development plans is finding your USP.

You should know what you stand for?

Try to be as unique as possible.

If you can sell your products at the cheapest price, then sell it.

And if you can offer the most expensive price then let it be.

Therefore idea is to be unique in terms of price, quality, technology, or anything else that you can find.

SWOT analysis

Another growth strategy could be that you conduct a SWOT analysis.

This simple test will reveal your company’s strengths, weaknesses, opportunities, and threats.

After conducting this analysis, focus on your strengths and opportunities to help your business grow.

Invest in your human resources

The human resource is the capital for a reason.

Its employees run an organization.

They are their biggest strength.

Their efficiency, dedication, motivation, and competence have a direct bearing on the company’s growth.

It is a good idea to invest in your human resources.

So, give them market competitive salaries, better working conditions, train them to upgrade their professional knowledge, and hire new talent if the old one is not doing for you.

All these investments in your employees will pay you back heavily.

Stages of business growth:

There is a lot of debate and theories abound regarding the stages of business growth.

Some define it as a 4 stage process, and others make it a 5 or 7 stage process.

It is still very open-ended, and new theories keep popping up with the changing times and trends.

Here, we will take a look at the most popular 4 stages of business growth theory.

The 4 stage business growth theory:

According to this theory, the four stages of business growth are as follows;

• Start-up
• Growth
• Maturity
• Renewal/Decline

Start-up

This is the first stage where you are in the process of setting up your business.

You meet new and different people, exchange and develop ideas, and get the hang of things.

You want to find the most profitable method to sell your product, and this is your main focus.

in addition, many businesses fail at this stage as they are unable to generate sufficient revenue to stay afloat.

So, here a business model should be developed, and cash flow should be maintained to meet expenses.

Growth

This is where your business strengthens its position.

This stage arrives after 3 to 4 years of start-up.

Your employees may have completed around 5 years with you.

Their job descriptions are now well defined.

You may also be looking to hire more competent and valuable persons in your company.

The focus in this stage is on how to make your venture grow.

Therefore to achieve, you diversify your product line, increase your market penetration, and make investments in your enterprise to make it more productive.

Maturity

Maturity should be the 3rd stage of the organic growth of the business.

Here things start getting steady and stable.

Sales are going smoothly, and so you can forecast your revenue streams quite accurately.

So, your enterprise is growing at a predictable rate, and professional management is running the company’s affairs.

It is a relaxing time where nothing unusual happens.

So at this stage, businesses usually grow by acquiring other companies or spinning-off their product lines.

At this stage, you decide whether you cash out your investment and move to other ventures.

Or you can re-invest in your existing business to make it grow further.

Renewal/Decline

The dilemma with most businesses is that they are in decline, but they don’t know it yet.

They feel they are stable, yet they are either entering decline or already in it.

The fact is you have to preempt decline to prevent it from setting in.

If your sales are continuously declining, you need to take stock of things before it is too late.

You sit with the management and discuss with them the company’s future.

At this stage, you usually need to invest in fresh technology and human resources.

You also have to re-align your organization’s culture with contemporary times.

If you do all this in time, you enter the renewal stage, where you find new ways of doing things.

If you don’t, then it is a decline, and you better cash out your investment before it hits further lows.

You have to decide on which stage does your business stand and then perform according to that model.

This is the most popular stage of a business’s growth.

Other models /theories are mostly based on this with few steps added here and there, but the basic premise remains the same.

Also, this was all about business growth strategies that we have discussed at length here.

We hope you find this to be informative.