For small businesses, the first taste of success can be intoxicating. After achieving their initial, short-term post-funding goals, however, many small business owners struggle to decide on what to do next. You need to determine which one of the best growth strategies will keep your business moving forward.
The absence of solid growth strategies is likely a deciding factor for the statistic that only half of startups survive for more than five years, and only a third remain operational for a decade or longer.
To help you continue to grow your small business successfully, our team here at HJR Global has compiled a list of their best snippets of advice for growing a small business.
Practice Market Penetration
Market penetration is business jargon for when a business injects a market with their own products or services, thus penetrating the market. Market penetration is essentially the default takeoff point for business growth, making it one of the most safe and reliable growth strategies.
Market penetration works best when the industry you’re attempting to interject your own products and services into is stale or lacks innovation. Markets with heavy-hitters already competing tend to ward off newcomers, which is why you don’t see many smartphone startups competing with Apple and Android in the U.S. right now.
The ultimate goal of market penetration is to gain market share. You can gain more market shares by offering lower prices, beating competitors in terms of quality and using marketing to become more visible than competitors.
Ultimately, you will only successfully penetrate a market if you’re able to convince existing customers in that market to forego their go-to providers and turn to you, or if you bring entirely new customers into a market. As such, setting yourself up as a “better” product or service than those your competitors offer and committing to branding and ads that convincingly sell that message to consumers, are your best bets.
Social media gives small businesses a great opportunity to run inventive, almost grassroots ad campaigns that can allow them to quickly penetrate a market. To get an idea of just how effective social media-driven market penetration strategies can be, MVMT Watches grew from $1 million to $60 million in sales in just four years and drove most of their advertising through social media websites such as Instagram.
Consider Market Expansion
Market expansion describes the act of selling currently existing products or services in a new market. This is one of the growth strategies that is effective for businesses that can’t take advantage of market penetration due to competition in existing markets.
Selling your product in a new country or targeting a new demographic with your advertising are the most basic ways to practice market expansion. However, you can also expand your market by making slight changes to your product. For example, if you have a makeup business that already ethically sources your products, then making cruelty-free makeup a core element of your advertising can open you up to a totally new customer base.
Diversify Your Revenue Streams
Diversifying your revenue streams is as simple (or as complicated, depending on your market and industry) as finding new applications for your product or service, or new ways to market your product or service to consumers. You could offer a new product or service, find new distribution lines, and other ways. However, the development of new products and services is only one element of revenue stream diversification. You should also consider investing in your company blog. As you will no doubt have noticed, in recent years many companies have dramatically expanded their blogs- including us! The reasoning behind this is simple. Most consumers trust blogs as reliable sources. If you can build a high-quality, consistent blog that targets the same niche as your products and services, your blog can act as a perfect partner-in-crime to your products and services by not only giving current customers the latest news in your industry or market but also by introducing new potential clients to your brand.
In a similar vein to blogs, consider expanding your social media presence. You’d be surprised by the kind of revenue that a well-optimized social media presence can generate, which is why we’ve seen big-name brands like Nike greatly expanding their social media presence over the years.
Take Mergers And Acquisitions Seriously
Many small business owners view the process of acquiring new companies or merging with others as something that can only be done successfully by Fortune 500 companies. However, the reality is that even small businesses can make great leaps in their market value and profitability by either acquiring or merging with the right businesses. One of the leading benefits of acquiring another business is that you can simultaneously reduce competition and expand your product line by purchasing another company in your field or expand your capabilities by merging with another business.
Similarly, considering a merger can be more beneficial than many small business owners might think. While it’s true that merger agreements are often finicky and unfairly biased in the favor of the company with the most market value, if you can find a competitor who occupies the same niche as you and hash out a fair merger deal, you can essentially double your market share.
Diligently Measure Your Progress
Measuring progress can mean a lot of different things depending on your industry. However, research shows that the majority of companies have adopted this strategy over the past 10 years. This is in part thanks to the a common adoption of an identifiable vision for their brand. For example, Amazon’s vision could be “to provide consumers with a supermarket experience from their home,” or Apple’s vision could be “to provide a set of luxury, interconnected technology products to an affluent user base.” Since your company was likely borne out of a specific vision, take this as an opportunity to reflect on what that vision is.
Identifying your company’s vision allows you to get your employees on board with that vision and to figure out what exactly you need to achieve that vision. What vendors would be most helpful? What will your profit margins need to look like? By identifying these factors, you can start to create a system by which you can measure the progress of your company.
This data can help you identify opportunities and make sure the growth strategies you apply are successful.
Are you a small business owner struggling to grow your business? We’d love to help! HJR Global specializes in helping small and medium businesses identify and address pain-points, allowing them to achieve both profitability and the realization of their company visions.
To learn more about what we can do for you, click here.