The pretty famous Forbes statistic that any new entrepreneur fears is—only 80% of small businesses survive at the end of the first year. And at the end of five years, only half of them will have survived. It could feel discouraging to many, but take it or not, it is the hard truth. Whether a company can survive the hurdles or is going to exit the market depends solely on the company’s growth. Thus, any small business needs growth to sustain the challenges, continue to operate, and grow into an enterprise.
What is a business growth strategy?
A growth strategy for a business is a roadmap or plan of action that business owners create. It is with this growth strategy that every small business fights the competition and grows into a giant. This plan of action consists of defined goals, methods, or processes to execute the plan, etc.
Important of all, not all businesses will have the same growth plan or strategy. Because each business will hang around at different stages of growth. Accordingly, their goals and growth strategies may vary.
Understanding the five growth stages of a small business
We all know that “Rome was not built in a day.” Similarly, each small business will take its time and effort to progress through the different stages of a business and grow into a big company. Listed below are the major five stages of every small-scale business.
Stage 1: Seeding the business idea and checking its viability
Stage 2: Starting up the business and stabilizing the operations
Stage 3: Growing the customer base and achieving breakeven
Stage 4: Exploring new opportunities and partnerships
Stage 5: Expanding the business for maturity or exiting
Top 7 Business Growth Strategies for Small Businesses
- Market penetration and expansion
- New product development
- Acquisitions and mergers
- Multi-channel marketing
- Diversification
- Reducing the costs
- Customer loyalty
Market penetration and expansion
This is one of the long-term growth strategies that small businesses use to beat the competition in the market. First, the company tries to penetrate the market by increasing sales among its existing customer base. Later, the company tries to expand the market by selling to new markets or customers. With this growth strategy, a business can easily increase its overall market share and become stronger in the field.
New product development
Customer needs keep changing now and then. Accordingly, the company has to come up with a new product or redesign or develop the existing product(s). This strategy will help the company sail through the growth stages 3, 4, and 5 of the business life cycle.
Acquisitions and mergers
Acquisition is when one business acquires another business. On the other hand, a merger is when one business merges with another. These are powerful growth strategies that small businesses take when experiencing the last growth, i.e., maturing or exiting. Either you have to buy from or handshake with another business that has the required expertise, product lines, customer base, or essential resources.
Multi-channel marketing
Exploring new ways of channeling your products and services is such a great growth strategy, according to the Forbes Business Council. Small business owners need to find new innovative ways and alternate marketing channels to promote their brands.
Diversification
This happens when a small company tries to launch new products or services in extremely new markets. Of course, this growth strategy requires sufficient finances, resources, and expertise to boldly pitch into the new market. Horizontal diversification is when your company launches new products to the same customer base. Vertical diversification is when your company competes with its vendors or customers.
Reducing the costs
A small-scale business that’s striving to survive the market will definitely use this growth strategy. Eliminating the unwanted costs that a company incurs will help improve its bottom line. These savings can help the company invest in implementing the chosen growth strategies.
Customer loyalty
Retaining existing customers by providing them with loyalty and credit is another great growth strategy for a business in the expansion stage. By doing so, the company will continue to expand and penetrate the market. Besides, these loyal customers will help in word-of-mouth, and they might turn into your brand advocates at a later point in time. Whoa!!
Conclusion
Now, were you able to find out which growth lifecycle stage your business is currently in? As a business owner, which growth strategy have you opted for?
Drop in your comments! For expert guidance and consulting, click here.
