Growing Pains: How to Grow Your Business
Written by Angie Mansfield
Read this article in the August issue of Business Review Australia
Business expansion is one topic that makes many small business owners break out in a cold sweat. It can be difficult to choose the best expansion method for your particular business - and what if you choose the wrong one? You could invest thousands of dollars only to see the effort fall on its face.
The conundrum, of course, is that growth has to be part of a healthy business model, if you don't want to get left behind by competitors.
Here, then, are a few ideas for growing your business, in order from the lowest risk or financial investment, to the highest >>>
Building on Current Business
Finding Alternative Marketing Channels
Offering the least amount of financial risk to your company, alternative marketing channels let you reach a wider customer base without leaving your local market. One easy and inexpensive example of this is to take your marketing message online, via social media channels or online advertising.
Mobile marketing, such as sending coupons to a customer's smart phone, is another great way to reach people -- especially younger customers who are likely to have embraced mobile technology.
Narrow Your Focus
While it may be scary to focus on just one segment of your local market on which to concentrate your marketing efforts, this can be a great - and relatively risk-free - way to grow your business.
By focusing on a narrower, highly targeted segment of customers, you can work on showing them how you meet their specific needs. This can grow you a much more dedicated following.
Pepsi used this tactic to great advantage in its long-running competition against Coca-Cola. Realizing that it wasn't gaining traction by trying to appeal to all consumers, Pepsi narrowed its focus to younger customers. By choosing young, popular spokespersons and appealing to the under-30 crowd, Pepsi carved out a respectable niche for itself in the soft drink market.
Market Penetration and Development
A relatively low-risk way to grow your company, this tactic involves either selling more of your current product to your current customers (market penetration) or selling your product to adjacent markets (market development).
To sell more product to your current customer base, you'll need to come up with marketing tactics that will encourage them to buy more. One good way to do this is to identify or adjust your unique selling proposition - the one thing you do better than any of your competitors, that makes customers want to buy from you and only you.
Franchising is one of the easier ways to start selling in an adjacent market. Many fast-growing companies have used this tactic for rapid expansion. Just remember that this will be a bit riskier, and will require more work. You'll have to develop training materials to ensure the franchise sticks to your company values and message.
New Product Development
Your next step to expansion could be to create a whole new product, or new product line. If possible, try to make this product one that your current customer base will need and want -- it's far easier to sell to existing customers than to convince new ones to take a chance on you.
According to consulting firm VSC Growth, around 70 percent of mergers and acquisitions fail to meet their expected value, and more than half actually destroy the value of the companies involved.
But if you're willing to take the risk, this can be a very effective method of quickly expanding your business.
You have several types of acquisitions to choose from, depending on your market and business situation >>>
This involves buying competing businesses just like yours. This type of acquisition adds to your company's growth, while at the same time eliminating barriers to future growth in the form of competition. It can also give you a shortcut to product and market development.
Buying one or more of your suppliers gives you control of the supply chain. This can help you develop new products faster, and at a cheaper cost.
You can also go the opposite direction and buy a company that's part of your distribution network, such as a factory buying a retail store. This allows you to push your products in your stores, while downplaying or not carrying competitor products.
Whichever strategy you choose, it needs to be flexible and able to respond to market changes. Instead of taking a year to develop a lengthy growth strategy, think in smaller steps that can be easily modified on the fly to adjust to changed consumer demand or other market factors.
Growing your business can be a scary process, but it doesn't have to make you lose your shirt.
About the Author
Angie Mansfield is a freelance blogger, writer, and self-proclaimed word nerd living and working in South Dakota. Her work covers a range of topics for small business owners, including management and marketing; and for aspiring businesspeople, including choosing the best business careers.
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