In layman’s terms, a business means an organization where people work to make and sell their products or services for a profit. Businesses of any size and type are constantly looking for ways to expand their market share or increase their revenue with time. Growing your business is not easy! There really isn’t an easy one-fit strategy to grow your small business. But there are a few strategies you can implement to give your business the best chance at growing. It includes a lot of planning, taking calculated risks, conducting sophisticated market research, etc.
Business growth is said to be achieved at a point where – your business expands its production or manufacturing, its customer base, diversifies its products or services, or increases its brand value. There is not any one way to grow a business, but identifying the right opportunity is crucial. That requires a complete understanding of your business and its performance. Growth is important for long-term survival in the market.
In this blog, we have put together a few key strategies to grow your business or start-up.
Table of Contents
Market Research
One of the first strategies for the growth of your business or start-up is market research.
Market research not only helps you better understand your target market, or existing customers, but also your potential market and customers, and most importantly your competitors! Knowing your competitor’s strengths and weaknesses can also help you drive your decisions accordingly.
Market research is all about gathering consumer feedback on your product or service and collecting information to determine whether there’s a fit for your idea and whether it’s something people will pay you for.
Gathering primary data and secondary data on your Business and Industry to conduct fruitful market research is a good starting point.
Primary Data
The data gathered from the customers or the general public directly. It helps you to determine your product or service’s pros and cons. It serves as a guide in deciding how to price your product or service.
Secondary Data
Existing data that can be used to retrieve customer information. It includes government census data and surveys done by other companies and organizations. Secondary data gives us a macro view of the marketplace.
Conducting market research eases the decisions to be taken for the betterment of the business, and deciding the right market for your product or service. It helps in knowing your competition and the ways to beat it.
You can use social media for cost-effective analysis, such as gathering feedback on a new product with Twitter polls, testing ads on Facebook, and even finding brand ambassadors on Instagram.
Customer Retention
This strategy accelerates business growth as well as reduces cost.
Customer retention tells us that it’s not enough to just get new customers for your business. You also need to hold on to your existing customers. When you increase customer retention, you’re building customer loyalty, which can then increase sales.
It costs more to get new customers than it does to keep your existing ones. So, focusing on retaining customers will decrease the cost spent on something that is not a guaranteed investment.
You can increase your customer retention by
- Prioritizing your customer service
- Building trust with your customers, so keep your promises!
- Taking customer feedback
- Offering unique services and promotions to your existing customers
- Using a Customer Relations Management (CRM) System
- Creating customer loyalty programs
- Engaging with customers on social media
Customer retention helps you understand how loyal and satisfied your customers are, how strong your customer service is, and if any red flags may turn off your potential customers. Focusing on customer retention pays dividends in the long run.
Use this formula to calculate your Customer Retention Rate (CRR),
CRR = ((Customers at the end of a period – new customers during this time period)/Total customers at the start of the period) x 100
Merger (Strategic Partnerships)
This strategy includes the merger between two different businesses, thereby forming strategic partnerships to increase your brand value and visibility in the market. A strategic partnership with another business can give you the chance to reach a broader network of customers.
A merger is an agreement that unites two existing companies into one new company. It is commonly done to increase the business’s reach, expand into new segments, or gain market share.
Types of Mergers
- Horizontal Merger – between 2 companies operating in the same industry. It is typically between 2 or more competitors offering the same products or services.
- Vertical Merger – between companies operating at different levels within the same industry’s supply chain that combines their operations.
- Conglomerate Merger – between companies engaged in unrelated business activities. A pure conglomerate involves unrelated companies and a mixed conglomerate involves companies that are looking for product or market extensions.
- Congeneric Merger (product-extension merger) – between companies in the same market that sell different but related products or services.
- Market Extension – between companies in different markets that sell similar products or services.
Acquisition
Acquisition means when one company purchases more than 50% or all of another company’s shares to gain control of that company. This is one strategy where one company acquires the other company to accelerate growth and expansion by increasing its resources.
It is primarily done to diversify, gain market share, increase customer base, reduce cost, seek economies of scale, and for the advancement of technology. It is also done to eliminate competition and to enter into foreign markets in the long run.
Acquisitions have their cons too, as they can also be time-consuming due to complex legal procedures and paperwork. It is also subject to internal and external negotiations, investigations, audits, and reviews. It can cost a lot of money other than the actual buyout, legal fees, tax implications, etc.
Types of Acquisitions
- Horizontal Acquisition – when a company buys another company that offers similar products or services.
- Vertical Acquisition – when a company buys another company that produces a product in its existing supply chain.
- Congeneric Acquisition – when one company buys another company that offers different products or services but caters to the same customer base.
- Conglomerate Acquisition – when one company buys another company from a completely different industry.
Diversification
This strategy is to grow your business by diversifying your products or services into new markets by creating new products or services.
Diversification is the practice to introduce a new product or service into your supply chain to increase the profits of your existing business. The new product or service could also be a new segment of the industry.
Offering new and different products or services can help you get new customers. But do thorough market research prior to diversifying. This will help you identify the right opportunities for new products or services in the market you want to expand your business in.
Types of Diversification
- Horizontal Diversification – when you create new products or services that are complementary to the existing products or services.
- Concentric Diversification – when you create new products or services that are similar to your existing products or services.
- Conglomerate Diversification – when you create new products or services that are entirely different and unrelated to your existing products or services.
Networking
Networking as a growth strategy is to increase your brand visibility to attract new customers!
Networking for those working in the social impact is the best growth strategy. It should include a plan to build and manage a network with individuals or firms to achieve desired yet shared goals. Networking will lead to an increase in your customer base and your brand visibility which will in turn grow your business!
You can participate in events, to meet similar business owners. Networking will take up your time, money, energy, and other resources. But its ROI (Return on Investment) pays off by finding the right opportunity to help you grow and expand your business.
There can be two ways of networking
- External Networking – to seek opportunities outside the organization, the right individuals, or firms.
- Internal Networking – looking for growth opportunities within the organization.
Franchising
This strategy is less about hustle and more about growth! It’s a growth strategy for small as well as large businesses.
Franchising simply means selling your business rights to an independent owner, who then operates their own franchise of your business. It is a commonly known business expansion strategy. A franchise increases the number of locations of your business, which ultimately increases brand visibility. Hence, it leads to more sales and revenue!
Two parties enter into a franchise agreement, allowing the franchisee to use the franchisor’s brand name and value. The sale of products or services is primarily due to the associated brand. This essentially amounts to the franchisor leasing out its intellectual property rights to the franchisee.
In return, the franchisee pays a fee to the franchisor. Franchising rights can be granted to one or many individuals or firms. If one individual or firm gets these rights, then he or she is said to be the exclusive seller of the franchisor’s products or services or intellectual property rights.
Franchising is a way to expand the business without incurring additional costs, as all expenses of selling are borne by the franchisee. This also helps build a brand name, increase goodwill, and reach more customers. The basic disadvantages of it include that it does not give direct control. Moreover, a royalty amount has to be paid to the franchisor on a routine basis.
Adaptability
This strategy is a soft skill that is very crucial for business growth. It simply means to adapt according to the market environment changes. Adaptability opens up your mind to new ideas, makes you question the status quo, and gives you the willingness to go against convention. It prepares you for the dynamic market environment changes from time to time, to avoid lacking behind in the competition and to stay afloat in the current marketplace. Businesses that don’t keep up will eventually fall behind.
