{"id":58912,"date":"2022-10-26T11:05:00","date_gmt":"2022-10-26T11:05:00","guid":{"rendered":"https:\/\/we-bc.ca\/?p=58912"},"modified":"2024-05-10T15:54:19","modified_gmt":"2024-05-10T15:54:19","slug":"growth-strategies-for-small-business","status":"publish","type":"post","link":"https:\/\/news.we-bc.ca\/en\/growth-strategies-for-small-business\/","title":{"rendered":"Are you Good to Grow? Growth Strategies for Your Small Business"},"content":{"rendered":"\n

Are you feeling stagnant in your business, but aren\u2019t quite sure which growth strategies will work for you? That\u2019s what we\u2019re going to cover in today\u2019s business skills blog.<\/p>\n\n\n\n

There are some exceptions, but most entrepreneurs I speak to are not content for their business to stay just where it is. They want to grow their business<\/a>! Maybe they want to expand to a new product line, enter a new geographical market, or open a new location.<\/p>\n\n\n\n

To start, let\u2019s go back to Business 101 and cover some of the main approaches you can use to grow your business based on the Ansoff Matrix \u2013 a classic business framework developed by H. Igor Ansoff in the 1950s.<\/p>\n\n\n

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According to this framework, growth strategies can be organized into a matrix, with products (what you sell) on one side, and markets (who you sell to) on the other.<\/p>\n\n\n\n

So your strategy might be based on expanding existing products and existing markets (#1 – market penetration), existing products and new markets (#2 – market development), new products and existing markets (#3 – product development), or new markets and new products (#4 – diversification).<\/p>\n\n\n\n

I\u2019ll dig into each of these approaches one-by-one and provide some ideas for how to apply this strategy to your business.<\/p>\n\n\n\n

Lastly, I\u2019ll cover a few potential roadblocks you should look for when setting your growth strategy. After all, growth is good, but it needs to be sustainable.<\/p>\n\n\n\n

Growth strategy #1: Market penetration \u2013 Grow sales of existing products to your current customers<\/h2>\n\n\n\n

An effective \u201clow hanging fruit\u201d growth strategy can be realized by building your relationship with existing customers to entice them to purchase more of your existing product. After all, your customers already know you, and presumably, enjoy your product. So how can you make that relationship even stronger?<\/p>\n\n\n\n

Depending on your product, it can be quite effective to focus on simply getting your existing customers to purchase from you more often.<\/p>\n\n\n\n

People probably have a limit to how much they can spend (I only need so many cups of coffee in a day or pairs of pants in a year) but in many cases you can try to earn a higher relative share of their purchases in that product category.<\/p>\n\n\n\n

For example, let\u2019s say someone has a budget of $100 per month to spend on clothes. Right now they spend $40 per month at your store. That gap of $60 represents potential additional revenues if you could just provide what they\u2019re looking for.<\/em><\/p>\n\n\n\n

Potential tactics to increase sales can include loyalty programs and promotions, VIP and early access sales, or even just focusing on providing top notch service!<\/p>\n\n\n\n

In a previous post I provided some ideas for how to use marketing tactics to better reach your target market<\/a> \u2013 so look there for ideas as well.<\/p>\n\n\n

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Growth strategy #2 Market Development \u2013 Increase sales of existing products to new customers<\/h2>\n\n\n\n

If you\u2019re a newer business, it\u2019s essential to focus your early efforts in a very targeted way (to your target market, of course). But once you have a good handle on your product and are operating sustainably, maybe it\u2019s time to develop new markets for your existing products.<\/p>\n\n\n\n

Some new markets will be a simple extension of your target market. Maybe it will make sense to expand to a new geographic location, start an online store, or maybe even start exporting<\/a> to another province or country. But you can also develop new markets for your existing product by discovering the value that other untapped market segments could get from your product.<\/p>\n\n\n\n

For example, maybe your product can be sold directly to other businesses (B2B), instead of just to consumers (B2C). Perhaps there are institutional opportunities like selling to governments<\/a> or getting involved in a supplier diversity<\/a> initiative?<\/em><\/p>\n\n\n\n

The key is to take a step back and think about the function of your product and who else might benefit from it? Maybe instead of only targeting new mothers for your baby store, you could also tap into the market of grandparents looking to spoil their grandkids. Same product, new market.<\/p>\n\n\n\n

Once you\u2019ve identified a new potential market, you\u2019ll need to revise your marketing strategy accordingly\u2014this is a new market, so they will need a targeted marketing approach.<\/p>\n\n\n\n

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Growth strategy #3 Product Development \u2013 Develop new products for existing customers<\/h2>\n\n\n\n

Next up in the matrix is to sell new products to your existing customers. Again, you already have a relationship with the customer, which makes it likely that they will consider new products from you as well.<\/p>\n\n\n\n

New products can be an extension of your current products (such as offering new colours, designs, or flavours), and this can be a good approach for products that customers are likely to buy more than once.<\/p>\n\n\n\n

For example, your customer might love your t-shirts so much they want one in every colour. Or they can\u2019t get enough of your artisan strawberry jam, and they can\u2019t wait to try more flavours.<\/em><\/p>\n\n\n\n

New products can also be something that complements or accompanies your existing products. Perhaps your clients need a pair of shorts or a hat to compliment their t-shirt. Or they need artisan crackers to accompany your artisan jam. One thing to note, however, is to make sure that production and sales of this product fit within your business model.<\/p>\n\n\n\n

You don\u2019t want a hasty product expansion to negatively impact your existing (successful) business.<\/p>\n\n\n\n

Growth strategy #4 Diversification \u2013 Develop new products for new customers<\/h2>\n\n\n\n

The most advanced (and risky) growth strategy involves diversifying into other businesses that will target new customers in new markets.<\/p>\n\n\n\n

These new businesses may be related or unrelated to your core business. For example, if you operate a coffee shop, you could diversify into opening a bakery that supplies coffee shops with muffins. In this way, you are capturing more of the value chain.<\/p>\n\n\n\n

Alternatively, you might diversify into an unrelated business as a way to balance out your other business.<\/p>\n\n\n\n

For example, you could open an ice cream store. The ice cream store will be busy in the summer, which will make up for fewer people buying hot coffee. Large conglomerates are probably the best known examples of diversification, but you don\u2019t have to be a billion dollar company to try it out.<\/em><\/p>\n\n\n\n

One approach is to partner with a complementary business to develop a strategic alliance that benefits both parties. You can also purchase a complementary business, which allows you to take on the skills and institutional knowledge of that business without needing to build it from scratch.<\/p>\n\n\n

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Growing Sustainably: Are you good to grow?<\/h2>\n\n\n\n

When your business is new, it\u2019s very tempting to want to take over the world. After all, if people love your product, what\u2019s the harm in trying to grow? Well, if you don\u2019t plan your expansion carefully, it can actually set you back! Here are some roadblocks to look out for:<\/p>\n\n\n\n