Small Business: Growing Your Business

Growth in a business is essential. How much growth, depends on your vision for your business….

Many business owners often confuse growth with expansion. The expansion is moving into new product lines, new services and new areas. Growth is increasing your ability to continue with the products and services you have. Growth may require expansion, but expansion is not necessarily necessary for growth.

Growth is necessary, at a minimum, to ensure your business maintains a healthy profit margin. Expenses typically increase each year and as such your business needs to grow, otherwise it will ‘fade’.

That’s why it’s so important to have a business plan and regularly review your business performance! Understanding the financial results of companies and how target markets are performing is critical to the continued success and growth of companies.

Be honest with yourself…

Sometimes the biggest obstacle any small business owner can have is themselves. Too often we as business owners are victims of our own success and ignore the indicators of change in our market. A smart business owner will make sure that he can independently assess his business; a business mentor is excellent for this type of supervision.

Be brutal in your assessment – ​​really extrapolate the possible changes in your market and determine how you can refine your trading strategies to capitalize on the changes.

In one of my ‘previous business lives’, I ran a franchise retail store. We were a very niche business and when we first opened the stores we did very well. However, as the market has evolved, it has become more of a consumer market (not a niche) and our franchise has not changed its strategies to account for this. That franchise no longer exists, it was placed in suspension of payments.

growth strategies

There are several growth strategies that a business owner can apply.

sell more of the same

This is possibly one of the most popular strategies for business growth: do more of what you’re already doing.

This could be a valid approach, particularly if the business or market is relatively young.

One of the most important things to consider here is whether there is ‘room’ to do more of the same. If your business offers services, can existing staffing levels handle more work, and if not, can more people be hired quickly enough to get the job done?

Does your market allow enough growth in selling more of the same? Sometimes the market is close to saturation and selling more of the same will not provide enough growth for a business.

Consider moving to other target markets with the same product or service. This will often require a rethink of the Unique Selling Proposition, but can reap huge rewards.

If the business doesn’t have enough personal power to sell more, consider options like licensing and franchising to increase reach. A very simple method to immediately add more sellers to the company is to offer an Affiliate or Referral program, where the company will pay a commission or referral fee to people who bring new business.

Raise prices

Raising the prices of your products and services can generate growth. This approach must be carefully implemented and the results regularly monitored.

Higher prices will, in general, result in a higher profit per sale and as such a higher profit overall.

In some cases, raising prices will also result in increased sales. This tends to occur when the price of a product or service is so low that it gives the perception of low value/poor quality or appeals to a target market that is unwilling to spend money. When the price increases, the target audience feels that the quality is much better and that they will invest more easily. As the price increases and sales increase, growth occurs naturally.

I experienced exactly this in my retail store: we had quoted a product for less than $10, which we thought was an “irresistible price”. Unfortunately, our customers did not and the product did not move. After hearing from several customers that they thought something must be wrong with the product to make it so cheap, we raised the price to $14.95 and sold out in a week! Perceived value.

To diversify

Diversification is a valid and very smart business growth strategy. Add more products or services to your business portfolio.

Depending on your business plan, the products or services may be related to your existing product range or it may be appropriate to start a new ‘arm’ for your business.

Diversification, as a business growth strategy, provides significant benefit as the risk of market downturns is spread over a broader base.

By adding more related products and services to its portfolio, a company can also capitalize on return business from existing customers.

In conclusion

These are three very broad ways to grow your business, and which one(s) to use will depend on your business plan.