Once small businesses start seeing profits, they usually attempt to increase their sales. Keep in mind that there are techniques that small businesses can use to bring about growth. The technique that a company chooses to use for expansion will be based on its financial standing. You’ll also want to consider the competition and government regulations. Common growth strategies include diversification, product expansion, market infiltration, and acquisition.
Diversification
Diversification is a common growth plan for small businesses. When small companies develop new products for new markets, they are diversifying. This type of strategy is a risky one. If your company decides to go this route, then the development team will need to plan cautiously.
Advertising research is vital under a diversification growth plan. The reason for this is that your company will need to figure out if customers in the new market want to buy your products.
When you’re considering a strategy, you should also consider your company’s culture. Make sure that your company can develop value for its customers. You’ll also need to know what expertise is needed to provide the value and how well your company’s products deliver that value.
Product Expansion
When small businesses decide to expand, they’ll be entering into a market development phase. This phase involves introducing their current product line into a new market. Why do businesses decide to expand? They expand when the competition is squeezing them too tight to grow in their current market.
If a company cannot find a new market, it will not be able to grow. Small businesses may also embrace market expansion if they discover new ways for consumers to use their products. For instance, a small water bottle distributor that typically sells its product to sports teams may find that gyms also use its product.
Market Infiltration
A popular growth strategy for small businesses is market infiltration. When a small business selects market infiltration, it will market more of its current products in its current market. The way that a company can grow using its current product line and market is by increasing its market share.
Market share refers to the percentage of dollar and unit sales that a business contains in a market compared to its competitors. A common strategy for increasing market share is for a company to decrease how much it’s charging for its products.
When you’re beginning a new growth strategy, you’ll want to make sure that your company features a strong culture. This will decrease your turnover rate and lower employee stress levels.
Acquisition
Some small businesses decide to grow by acquiring another company. When a company chooses the acquisition route, they buy another company to increase its operations. Small businesses use this kind of strategy to increase their product line and break into new markets.
Selecting Growth Strategies
Once you select a growth strategy, follow the steps to obtain new customers and help your company reach its goals. Keep in mind that you may need to combine several growth strategies for expansion. If you need direction or support, contact me at the Productivity Intelligence Institute.
