Can’t decide what will be your next business move? These expert insights might help you decide on a growth path for your company.
Is your business ready to grow and take on the big players in your sector? For some entrepreneurs, growth can be easy to achieve by opening another outlet or addition of a new product to an existing range.
But for other business leaders, though, growth might not be as straightforward to achieve. “You know your business is running steady and you know you enjoy what you do, and you’re good at it, but you’re unsure of what the next logical step should be or which direction would be more beneficial for your business,” Experian digital marketing associate, Cindy Yip illustrates.
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According to Andrew Miller, a former chief marketing officer and brand strategist who founded the KindCoin platform, during the early stages of a business, the drivers of growth are normally linked to the founder’s philosophy, mission and practices:
“At this stage, goals are clear, your team is small, and your growth model comes down to simple business manoeuvres that improve your margins. When your company reaches a more mature stage in its lifecycle, future expansion becomes complex and requires more structure. This structure comes from building a strategic growth map that complements your business model.”
Deciding on a growth strategy and mapping it is vital
Because there are several ways for you to grow your business, Miller believes that crafting a tightly-knit growth strategy is essential to successfully growing your company.
“It’s important that your growth is considered methodically on both an internal and external level, and takes into consideration your resources and market position,” he says. “Your strategy can involve changing your business structure, partnerships or the singular use of marketing levers.”
Miller highlights five central business growth strategies that can drive you forward. “Building your model involves a combination of some or all of these strategies and their variations that best suit your company’s size and abilities.”
5 Business growth strategies that can prove effective across sectors
If you’d like to increase your revenue, extract more profit and stand shoulder-to-shoulder with leading players in the business world, here are five ways you can grow:
1. Penetrate the market more effectively
Effective market penetration is considered one of the easiest growth strategies to pursue.
“You build a product or a service and enter a market with established competitors. But to grow your business and gain market share, you have to differentiate yourself from your rivals,” Miller says.
“Your advantage may be that your product meets the market needs better than anyone else’s. That means you offer unique value. This value proposition can also take the shape of cost leadership. That is when you sell your product at the lowest price in the market to establish a customer base. You can also segment the market and focus on a specific underserved niche and expand from there.”
2. Target a wider variety of consumers
Miller explains that another ‘cornerstone’ growth tactic for entrepreneurs is offering your products or services in a new geographical area to new customers.
“If your current market position is saturated and you are meeting stiff competition or your growth is slow, you can expand to a new city, state or country,” he says. “You can accomplish this through partnerships with distributors who have established networks and can offer your product in new markets. If you have a well-known brand, you can also offer franchise options to other entrepreneurs to enter the new market with lower risk on your end.”
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3. Expand your product or service offering
Expansion of a product line is essential to growing a business. Offering new services, too, can help achieve growth.
“Bolstering your product line-up or offering new services is an important tactic for growth,” Miller says. “Small- and medium-size businesses usually use this method by offering variations of their core product line so they can reach a larger audience. You can create a premium version that serves the luxury market segment, a complementary product that is used alongside your existing one, or any variation linked to your buyer audience.”
4. Diversify your presence in the marketplace
Miller believes that diversification can be a risky growth strategy, but it can serve as a good way capture more turnover.
“This method involves selling a new product to a new market, at times unrelated to your core business,” he explains. “Diversifying requires research and involves a serious financial commitment to establish your presence. Companies diversify, usually, if they are mature businesses that boast a solid position in their core market already.”
5. Acquire (or merge with) another business
Small and medium businesses don’t have to go back to the drawing board altogether to achieve growth. Miller says that if you identify another company that does what you want to do, you can consider a partnership – or offer to buy them out.
“These are complex strategic steps that will require you to have a very clear understanding of your goals and resources,” he adds. “This approach is generally reserved for larger companies because it requires significant capital investment and poses certain risks, such as dilution of your brand or loss of control over management and strategic direction in the future.”
It’s advised to leverage tactics that align with your business’s vision and goals when chasing growth. The number of strategies you leverage will depend on your company’s maturity, resources, and desired pace of growth. Smaller businesses could utilise cost-effective growth methods like adding unique products to their portfolio or penetrating niche markets through new marketing activities.
Growing a business is hard work, but the rewards can be worth the sweat and sleepless nights. Why not speak to Standard Bank about how we can help you grow through a range of financial products and services. We can also provide you with sector insights as well as insights into Africa as the continent’s biggest business bank.