After your new business becomes profitable, you will have a strong desire to expand it further, to make it grow. But it won’t be easy. According to researchers, only 0.1% of startups ever grow big enough to generate $250 million in revenue. A tiny minority, just 0.036%, are able to achieve a turnover of $1 billion.
So this tells you is that most businesses are small and stay small. It’s very rare for a business to break the glass ceiling and make the climb upwards through fast and consistent business growth. As an ambitious entrepreneur, you want your small business to make the jump. But it’s not going to be easy. There are several challenges to overcome.
How can you make sure that your small business maintains a fast growth over the long term? Well, you will need to develop a growth strategy. Let’s see how this is done.
The first part of the growth strategy is to get maximum growth while taking the least amount of risk. So as a business owner, you should focus on taking fewer risks with your business and achieving maximum success.
Here’s what you should do…
Stage #1: Focus on selling as many of your current products to your present customers. Your current customers are your biggest assets. You don’t have to try hard to attract their business, as they already know what to expect from you. They are early adopters of your products and services and they are your greatest supporters. So attract your current customers first, at least at the earliest stage of planning for business growth.
Stage #2: Next, it’s time to find new customers, to develop your market. This means selling more of your current bestselling product or service to an adjacent market, which could be a nearby city or state. Most businesses expand very slowly at the start. Even Wal-Mart was only able to establish a presence in a few states for a couple of decades before Sam Walton decided to expand it nationally. Through this relatively slow but risk free expansion, you will be able to keep a better control over things.
Stage #3: Now, it’s time to look for alternative channels for growth. To pursue customers in ways that you hadn’t thought of before. For example, when Steve Jobs was faced with a decision on how to sell more iPods, he did the unthinkable for a technology company – he opened The Apple Store, Apple’s own retain chain. Nobody expected Apple to do this. But it had the intended effect as it took iPod sales, and later iPhone and iPad sales to a whole new level.
Stage #4: This stage is about developing new products to sell both to your existing customers and the new ones that you have bagged through your recent expansion. It is always better to sell new products to existing customers first, as the risk of rejection is far less. You can start selling the new products to new customers once they have achieved success with your existing customers.
Stage #5: Sell new products directly to new customers. You will be encouraged to do this if the market conditions are favorable to you. For example, Apple first sold the iPod to existing Apple customers. It soon expanded to newer customers and became one of the most successful products ever. That was until the iPhone came along in 2007. This time, Apple marketed the iPhone to all customers – both old and new customers. Since Apple had already by them established an excellent reputation in the technology industry, attracting new customers wasn’t hard at all. The iPhone soon become a revolutionary product that transformed the way people live, work, play, and of course, communicate.
These are the 5 stages of business growth that are common with any successful business. The key is to keep the risk and uncertainty over business growth as low as possible. Listen keenly to market forces and take positive action that will help your business expand faster, while at the same time taking steps for your self-preservation. Business growth should be fast, consistent and risk free.
Other Business Growth Strategies
There are three business growth strategies that are very popular, which you can use when your business reaches a certain size. The business growth strategies described here may not be entirely suitable for a small business. It is an option you should consider after you are able to achieve a certain success and heft with your business.
#1: Horizontal Growth – This growth strategy involves acquiring a competing business. Using this strategy not only helps your business grow faster, but eliminates a possible threat to future growth – a potential competitor. One of the examples of Horizontal growth is Cisco’s acquisition of Linksys, a cable modem maker. This allowed Cisco to expand its market share in the cable modem business in the United States and expand its product range.
#2: Backward Integration – Backward integration is a growth strategy that involves buying out your suppliers one after another, to control your supply chain. This is a strategy used by the great John D. Rockefeller and his Standard Oil. Not satisfied with being just a refiner, Rockefeller wanted to control the entire supply chain for oil, which led him to acquire oil producers across the country.
#3: Forward Integration – Forward integration involves buying out companies that are a part of your distribution chain. This was the growth strategy used by the garment manufacturer Chicos, which grew faster by buying up retail stores across the country to squeeze out the competition.
Another business growth strategy that was very widely used in the 1950s and 1960s, but is not so popular any more is diversification. Diversification involves growing your company by buying other companies that are completely unrelated to your core business. Some of the biggest companies in the world, such as General Electric, have grown big and powerful using this strategy.
So which growth strategy will you use?
You should develop a growth strategy that is responsive to the current realities of the marketplace and takes in cognizance the feedback from customers. Your business growth should keep up with the market changes and not get left behind. Hope you enjoyed the business lessons presented by us. We look forward to your continued company at Liverix.com, the best place to find business partners and business investors online.