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How to grow: diving into five core growth strategies

How to grow: diving into five core growth strategies

Posted 18th December, 2018 by Aidan

When you’re a small to medium business it can be easy to become myopic. With so many deadlines to meet and tasks to complete your focus can easily reduce from the big business picture to simply keeping things ticking over.

Growth can be measured by a spectrum of markers - from revenue and social media followers to team contentment and innovation.

Regardless of how you measure it, though, there are some tried and tested ways to achieve it. This post will examine a number of core strategies that practically every business can use to boost its fortunes.

Finding the right balance between status quo and growth

Before we get into the crux of this piece, it’s worth discussing a peripheral consideration that may impact how you approach the growth of your business.

If you think about the approaches you can take, you have the following:

  • Maintaining the status quo. In other words, the “If it ain’t broke…” strategy.
  • Pushing forward in an attempt to grow your business.

As you may have gathered, we’re talking about the latter in this piece, although it shouldn’t simply be your default option. In fact, staying where you are can be very effective too.

Choosing generic business strategies

The following business strategies can be growth strategies in their own right if implemented correctly.

Whatever you choose here will form the core of your overall business strategy. Let’s quickly go over them:

  • Cost leadership: In other words, sell products at a loss (also known as being a ‘loss-leader’) in order to attract custom without sacrificing quality.
  • Differentiation: Develop offerings that provide more value and quality than those of your competitors, usually at a higher price point.
  • Niche targeting: This involves taking one sliver of your industry and targeting that segment of your user base exclusively.

Economics guru Michael Porter suggests only focusing on one of these strategies at once, which is a sound idea. However, as we’ll get onto, many still choose to mix and match growth strategies.

5 core growth strategies to expand your business

Settling on a suitable growth strategy comprises many factors. These include, but are not limited to, how affluent you are, your competitors’ standing, and even government regulations.

As such, don’t consider the strategies below as mutually exclusive or that it’s simply and “and/or” decision. You may need to exercise fluidity here, and combine approaches to get ahead.

Let’s begin with arguably the most direct approach.

1. Product expansion

The growth strategy most businesses look to first is creating new products and services. This is understandable, as you’ll likely receive plenty of feedback from your customers on what they want to see from you next.

The simplest approach here is to give the customer what they want. However, you’ll also want to consider this approach when either your current lines become dated or obsolete, or the technology of your industry starts to evolve.

You’ll also want to start selling within your existing market initially. However, there’s a slightly more expansive approach you can take, which we’ll look at next.

2. Expansion in the marketplace

Expanding your marketplace is another time-honoured technique for growth. It’s a natural progression once you’ve exhausted your current options.

However, there are lots of other triggers for implementing this strategy beyond simply ‘hitting the ceiling’. For example, your analytics may show that your user base is naturally expanding in ways you hadn’t imagined. This gives you an organic way to sell to new customers and expand at the same time.

3. Penetration in the marketplace

You could be forgiven for thinking this encapsulates the previous two strategies, although that’s not totally true. Certainly, there’s some cross-over, but this essentially involves selling your current products and services within the same market.

However, the difference here is that you’re targeting your competitors’ customers. As with the previous methods, this is another natural and organic strategy many businesses choose to implement, as it can be very successful.

A key way of doing this is by reacting to your core business strategy. For example, lowering your cost further could increase your market share, while reiterating the unique differences in your lines compared to your rivals, which could see their customers make the switch to your business.

4. Diversification

We’re now getting into more risky growth strategies. We discussed mixing and matching strategies earlier, and diversification can be seen as marrying both product and marketplace expansion. In other words, you’ll sell new products to new markets.

This strategy leans heavily on market research and planning, which will obviously impact the funds you allocate. You’ll need to decide whether a new audience will take to a fresh product, which means your business will be all hands on deck to make this strategy pay off.

5. Acquisition

Finally, we have arguably the riskiest growth strategy – acquiring your competitors. This is exactly what it sounds like: you decide to buy out another company. On paper, it seems simple. However, it’s (of course) much more than a basic “yes or no” decision.

For instance, you’ll need to have plenty of funds available to actually make the acquisition in the first place. This isn’t including the further capital you’ll need to implement any necessary changes to finalise it.

Even so, this growth strategy does kill several birds with one large stone. For example, you’ll instantly obtain new products to promote to new customers, in a fresh market. What’s more, there’s the maximum level of cross-over when it comes to getting products under your umbrella in front of new customers.

Conclusion

There are two strategies for succeeding in business – maintaining the status quo, and growing your business. There’s a balance to make here, although growth should be an inherent part of your plan.

In this post, we’ve looked at five core growth strategies you can consider employing. Let’s recap them quickly:

  1. Expanding product lines based on the customers’ needs.
  2. Expanding the market you target.
  3. Increasing your market share.
  4. Diversifying your product line.
  5. Buying up competitors to achieve near-instant growth.

Categories: Tips, Marketing, Small Businesses

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