A successful business never stays stagnant. Even household-name companies are constantly changing up how they do things to keep expanding their footprint. These companies have the resources to pursue all kinds of initiatives, but a smaller business needs to first take important initial steps toward growth. Of course, that’s an imposing proposition, but this small business growth guide can help you get there. Read on to learn all the ins and outs of growing your small business.
How to grow a business
Growing a business is a matter of:
- Researching your competition. What are businesses like yours doing to succeed? What aren’t they doing? How can you fill that void? Answer these three questions to differentiate yourself in ways that attract potential customers while meeting the standards they expect from businesses like yours.
- Finding new opportunities. Regularly communicating with your customers and soliciting feedback can identify areas in which consumer needs aren’t being met. So too can market research. Once you identify opportunities, try rolling out new products or expanding your services to make the best of these opportunities.
- Marketing additional uses. You could be pushing your products and services with one use in mind and discover that many customers are using them in other ways. That’s not a bad thing – it’s an opportunity for growth. Market those additional uses to reach new customers you might not have even considered beforehand.
- Seeking strategic partnerships. If you can offer another small business important services, you can arrange for a mutually beneficial partnership. Your partner gets what they need from you, and you get greater access to your partner’s customer base. Each of these customers represents another opportunity for growth.
- Optimizing your sales funnel. Develop a thorough training program for your sales team to ensure consistency in prospect communications. Identify where customers begin to lose interest in your product and figure out how to maintain their enthusiasm instead. These steps will keep prospects invested and increase sales, thus driving growth.
- Prioritizing customer loyalty. Growth isn’t always about customer acquisition, especially since retention is up to 25 times less expensive. Turning one-time buyers into consistent, repeat buyers is another fast track to growth. The higher your customer lifetime value, the more quickly you can reach higher revenue goals.
- Attending networking events. At networking events, you can meet people who can be potential business partners, vendors, or new employees. All these people can put in work that improves your operations while exposing you to new prospects. The result is the very growth you’re seeking.
- Seek additional funding. Often, money is the main barrier between you and the growth initiatives you have in mind. Small business loans can eliminate this barrier, and small business debts come in various types that are each better for different types of businesses.
Growing a business online
Although all businesses benefit from the above growth steps, online businesses need to take separate steps for best results. Some best practices for online small business growth include:
- Enhancing your social media and website presence. Website builders and high-quality social media and blog posts are the foundation of a great web presence. You’ll also need to make your website mobile-friendly, user-friendly, high-speed, secure. Both your website and social media pages should include clear ways to contact you as well.
- Researching competitors online to see where you can outperform them. Other companies’ websites and social media pages are perhaps the best sources for your competitor research. Use what you see to set yourself apart through special online deals, personalized online marketing, and a robust email newsletter and list. Data analytics platforms and free marketing tools can help you promote these strategies and observe their returns.
- Being simple yet unique. There’s theoretically no limit to how many software platforms you can use in online business marketing, meaning excessive complexity is possible. Do your best to solely use platforms that help you achieve the above two objectives, diversify your services, and reach your other goals. This way, you keep things simple while making a unique name for yourself.
5 Company growth stages
As all the above advice suggests, company growth is a complex process. It’s so complex, in fact, that small business experts often split it into five company growth stages. These stages are:
- Development. During this stage, you’ll turn your business idea into a reality. Be sure to seek out feedback from friends, family, and business and finance professionals. Prepare yourself for challenges obtaining funding, choosing a business structure, writing your business plan, and measuring your potential profitability. Consider contacting a Small Business Development Center (SBDC) for further assistance.
- Startup. At this point, you’ll put together the infrastructure needed to actually launch your business. This infrastructure includes payroll, production equipment, and plenty more. Putting it all together is a challenging process that requires competitor research, delegation, and frequent price adjustments. Changing how you do things based on customer feedback can help you face these obstacles.
- Growth. During the growth stage, you’ll see more revenue, higher profit margins, and increased market visibility. Things will move fast here, making it tougher to keep up on accounts payable and receivable. Hiring will become necessary so you can properly tend to your increasing customer base. Small business loans are a great way to obtain the working capital to manage this all.
- Expansion. At this point, your business is stable, but you might be pursuing ways to increase your market share. The tough thing here is that you’ll be inching up upon even more formidable competitors while expanding your inventory, services, and marketing. Hiring highly specialized employees or third-party firms can help you surpass these challenges.
- Maturity. This stage is as close to business completion as possible, though modest growth pursuits may be necessary. After all, the market is always changing, and longtime businesses may need to adapt. Alternatively, you may find yourself wanting to exit, and strategies for doing so are rarely easy, as personal relationships are often on the chopping block. Methodical, well-considered decisions are most effective here.
Rapid growth problems
Presumably, you have a hunger to achieve your growth goals as soon as possible. While that ambition is respectable, it can also be unstable, as growing too rapidly can lead to myriad problems. Employees can become thinly spread, leading to work and customer service that leaves buyers dissatisfied. You might also run out of space if you have physical inventory or hire many employees who work in person. However, if you spend on growth more quickly than you earn, you might struggle to afford to move.
Losing track of your finances is perhaps the easiest trap to fall into during rapid growth. After all, with things accelerating faster than you can handle, can you really track every sale and expense? Plus, sales alone don’t mean success during growth – your market and competitors influence your future too, and if they’re outpacing you, these efforts may not have as big an impact on the market as you’d hoped.
Just as your sales tracking might get disorganized, so too can all your operations. Rapid growth can mean that some procedures and tasks get left by the wayside in lieu of more important, growth-oriented tasks. It can be easy for you and your team to fall behind, and that can translate to customers who can notice the impact.
Organic business growth
Another concept you should be familiar with as you grow is the distinction between organic and inorganic growth. The latter describes growth through acquisitions or mergers; all other growth is organic.
You can typically drive organic growth by optimizing your business operations and production budgets. As you do so, try diversifying your internal workflows, marketing, promotional activities, products and services, and more. Firmly identifying your target audience, unique selling propositions, key performance indicators (KPIs), and key qualifications can help too.
Organic growth typically gives your business more cost efficiency, flexibility, financial freedom, steady rates of growth, and basis in your strengths than inorganic growth. That said, it can be slower than inorganic growth and subject to market fluctuations.
Small business growth strategies
All the above advice can be distilled into the below tried-and-true small business growth strategies:
- Market penetration. Enter the market by lowering your prices, offering products or services unavailable elsewhere, acquiring new customers, and developing an unforgettable brand identity.
- Market expansion. Take what you already have to new markets. Doing so can mean opening new physical locations or targeting customers with different demographics.
- Product expansion. Stay in your market, but begin offering new products. You might see customer loyalty increase and experience a sharp uptick in customer lifetime value.
- Market and product expansion. Sometimes, identifying new customers and addressing their needs with products you don’t already offer can lead to growth. This strategy might take more work, but the potential return on investment can be worth it.
- Inorganic growth. As explained earlier, acquisitions and mergers are rapid conduits to growth. They connect you with new markets and customers virtually instantly.
- Integrative growth. This acquisition strategy hinges on where within your supply chain the companies in a merger are compared to one another. You can merge with a company at the same supply chain stage as you, one before you, or one after you. Alternatively, you can cut out all your middlemen. In every case, greater profits can result.
- Diversification. Another inorganic strategy, diversification involves merging with a business entirely outside your supply chain or market. Though risky, it can be a good move if a business consultant advises it.
- Multi-channel marketing. In general, the more channels through which you market to customers, the more customers you can acquire. Each new customer adds revenue that can lead to growth.
- Market segmentation. When you focus on a subset of your current market, you can conduct more targeted marketing campaigns that lead to higher conversion rates. You’ll be employing the same marketing tactics, just to a smaller but more responsive audience.
How to measure growth
The final step in any growth strategy is to measure your growth rates. To start, choose the right KPIs, look at employee satisfaction and performance, and review your business plan. Next, track changes in your revenue, workforce size, market share, cash flow, and expenses. Do the same for your customer acquisition costs.
Compare all these figures to those of your competitors, and compare all your marketing tactics to one another. This combination of comparisons will tell you if you’re on the right track and, if not, how you can switch gears to get there. Admittedly, it’s a lot to take on yourself, so bringing in outside help may be necessary.
Grow ahead
With this helpful guide, you’ll have a better understanding of the fundamentals you need to acquire new customers, increase your sales, and earn more revenue. Of course, a successful business will still face challenges ranging from funding to employee management. Visit the SmartBiz Learning Center for advice that can help you with various issues that may arise.
