In the modern business world, the focus is primarily on growth. Almost everyone wants to take a business from small, localized operations to a large, thriving company that brings in millions of dollars every year or even more. While there are small mom-and-pop shops that are fine with a modern business, it’s clear what the goal of most business owners is.
However, in a world where so many companies are trying to grow exponentially and reach all-new heights, it’s difficult to do so. Your competition has the same goals, and there are new complications that pop up as you grow, too.
To help you navigate this complicated endeavor, the team at Final Ascent has put together a list of business growth strategy examples that can help take your business to the next level.
We’re going to go over why growth is important, why it’s difficult, and of course, several strategies that you can use to achieve your goal of growing your business.
Let’s get started.
Why is Growth an Important Goal?
Obviously, the point of pursuing growth for most people is that it’s how you make more money when you own a business. If the business grows and produces more profits, everyone within the business benefits financially.
However, even if you’re content with your business’s size, there are other reasons to pursue growth.
First, it’s a way to help guarantee your company’s future success. The larger and more financially stable a business is, the harder it is for it to fall apart when an inevitable roadblock gets in the way.
If you have concerns that your business might not be able to weather common setbacks, then pursuing growth is a great way to protect against that risk.
Then, there’s the fact that growing your business makes it more valuable. Even if you’ve been in business for 40 years, never had an issue with how much you make, and just want to sell to retire, growth is a great idea.
Buyers will pay more for a business the bigger it is. Considering the sale of your business will likely be the largest earning event in your lifetime, and it will need to sustain you for the rest of your life if you don’t want to have to go back to work, it’s a good idea to maximize how much you make.
Growth helps with that.
What Makes Growth So Difficult?
We touched on this earlier, but growth isn’t exactly an easy goal to accomplish in the business world. Even with all your effort poured into it, if you’re not making the right decisions and leveraging that effort properly, you can easily spend years attempting to grow with no results.
This is for a couple of reasons.
Of course, it’s a cutthroat business world. As you get bigger, you become a bigger threat to established competitors, and you’re both pulling customers from the same pool; that’s why you’re considered competitors.
There are other difficulties, too.
You start to experience issues that weren’t a problem when you were smaller. You have more tax liability, and mistakes tend to be more costly since you’re scaled up; customers can become more difficult to work with since there are more of them, etc.
It’s a lot like when people say that being rich isn’t all it’s cracked up to be. Sure, you make tons of money, but there are new challenges you have to learn to deal with.
None of these things should scare you away from growing your business, though. Especially if you’re only growing it to increase its value before making your exit. The benefits far outweigh the drawbacks, and in the event you’re just trying to sell it for as much as possible, it’s a short-term situation, anyway.
The Strategies You Need to Use to Grow
Now that we have a few considerations out of the way, it’s time to delve into the business growth strategy examples you need to use to actually accomplish this goal.
As a primer, there are a few things you need to figure out before you start implementing strategies because that will define which strategies you need to use.
Are you trying to grow it to enjoy higher profits long term, or do you want to get the most out of selling the business a few years from now?
When do you need to see results before you don’t meet your goal? If you need to make your business grow within two years, focusing on slower methods might hamper your ability to accomplish your goal, but those are better and safer for the long term.
Finally, what degree of success do you want to see? How much growth do you need to realize the results you want? Some methods can reliably produce more dramatic results than others, but there are also risks to consider.
Once you can answer those questions, check out the following strategies to see what matches your growth plan.
1: Organic Growth
This is the most basic form of growth, and it should be a part of any growth plan if you want your results to be long-lasting.
Organic growth is when you use normal business practices to bring in new customers and improve your sales and conversion rates.
For many, this will include things such as improving product quality, changing prices, expanding your marketing efforts to get more of your target audience into the location, and spending money, etc.
This method takes time, and it can have varying cost requirements, but if you do it right, you’re not just boosting sales.
You’re bringing in more customers and convincing them to buy more. You’re building your customer base, and that’s a long-term investment if you don’t suddenly change things up and run them off in the future.
How much growth you see from this depends on a ton of factors, but it is reliable, and given enough time and resources, you can see respectable growth from it.
Even if you’re trying to quickly boost your company’s value with growth, diverting some resources and effort to organic growth is a great idea.
2: Product Expansion
A great way to quickly boost your business is to start meeting the demands of new audiences or to meet the demands of your current customers that you weren’t able to meet before.
You do this through product expansion and diversification.
For example, let’s say you operate a middle-market tool store. You’re not quite one of the famous big box stores, but you have a respectable customer base.
At the moment, you have a great selection of general hand tools and power tools, and you have supplies that are necessary for plumbing, woodworking, and metal fabrication.
However, when you look over your inventory, you realize you don’t sell anything that is specifically meant for electrical work. You have plenty of electricians who come in, but it’s for their at-home general tool kits, or they’re picking up the few general tools that they need.
Well, those electricians might love your store, but they have to go somewhere else for the bulk of their supplies. You’re not meeting their demands.
Using the product expansion and diversification strategy would mean you’d bring in electrical supplies, dedicate a few racks to insulated screwdrivers and other electrician-friendly tools, etc.
Since you know that you have customers who would definitely buy those products, it’s a safe way to quickly boost your growth.
However, you need to be careful. You can’t do something that doesn’t match your business, and you don’t have an existing customer base to capitalize on it.
For example, you wouldn’t start selling bread and pastries at your ice cream shop. That’s a wildly different niche you’re suddenly trying to fill.
3: Market Penetration
Our last strategy recommendation revolved around capitalizing on the unmet needs of existing customers, but you can also try to bring in an entirely new demographic with marketing. This is called “market penetration”.
Let’s say you’re operating a phone company that predominantly targets younger audiences. All your marketing is aimed at people between the ages of 18 and 30, but you realize that phones are pretty much universally needed.
The area around your business happens to have a large older population around 40-60 years of age.
Market penetration would describe an effort to start marketing to that older demographic that needs phones, but all your marketing and your entire brand image is targeted at younger folks and showing off all the complex features.
New marketing would demonstrate how user-friendly your phones are with simple payment plans, top-notch customer service to teach them all the ins and outs, and similar things.
With this, not only do you get a new demographic to start buying products you already have, but you also get benefits that come from engaging with that demographic.
Using the same example, the younger crowd buys more frequently and loves accessories, but the older crowd has more disposable income and is likely to recommend others.
Just be careful not to turn off your existing audience, and always make sure the demographic you’re about to penetrate is actually likely to provide you with customers.
Acquisitions are a fairly quick way to generate growth, a classic example of business growth strategies examples. This is when you purchase other companies or assets that those companies have, such as patents, and make them part of your own business model.
For example, if you know anything about the tech world, Microsoft’s Xbox brand has been acquiring large game studios for the last decade, and it has seen tremendous growth because of it. Every studio they brought came with high-demand IPs that generated hundreds of millions of dollars every year, and those perks became part of Xbox.
That’s what happens in the middle market, too. If you buy a well-known competitor’s business when they’re looking to retire, you can gain the demographic they were appealing to and anything else they had.
This is a costly form of growth because you have to acquire other major assets and businesses, but it is worth it if you make the right purchases.
However, you should probably get some guidance. If you decide to leverage M&A (mergers and acquisitions) to boost your business, call Final Ascent. We’ll provide you with professional consultant services to help you navigate the M&A world without making costly mistakes.
Finally, partnerships can be useful in some cases.
A partnership is kind of like the M&A strategy we mentioned above, but instead of buying another company or its assets, you enter a contractual partnership that is designed to be mutually beneficial.
This produces a number of benefits.
First, you immediately gain access to the resources and market reputation of the company you’re partnering with. That alone boosts your company’s growth considerably.
Then, there’s the help you get. Your partner will not only have a reason to care about your company’s success, but they also have their own business experience, and they can help you grow and navigate areas that you’re not as good in, too.
A good example of this is when Go-Pro and Redbull teamed up. Since both companies are aimed at a youthful, active crowd, the partnership made sense. They both tapped into each other’s markets, gained a lot from the partnership, and are still partnered.
Of course, you must ensure your partner is a good match. They should be somehow related to your industry or at least target the same audience, and you should both have each other’s best interests at heart.
Of course, they should also be worthwhile as a partner. If you partner with a failing company, you are basically harming your own business unless there’s a very good reason for you to do so.
Also, this shouldn’t be a strategy if you’re looking to make your exit. Yes, you’ll boost your company’s value, but you’re also tying yourself to a long-term commitment knowing very well that you’re going to leave. This is a strategy for those who want to stick around for the foreseeable future.
If you need assistance with business growth or need help from the best M&A advisors out there, contact us.
We’ll walk you through your M&A process and make sure you implement these business growth strategy examples to their core!