How many businesses have failed by trying to stay the same? In reality, the only constant is change, and the harder you try to resist it, the more problems your face. Thankfully, a reliable strategy that plans for your growth will save you endless future headaches.
Strategy is what makes or breaks a business. Neither good times nor bad times last forever, and a solid strategy is what will help you get the best out of both. There’s no such thing as staying stagnant, so plan out your areas and timelines for growth. Thoughtful planning sets your business up to overcome its future challenges.
- A breakdown of common growth and scaling methods
- How strategic planning helps you avoid failure
- What you need to build a successful growth strategy
- And intelligent ways prepare for your future
Growth and scaling methods
Understanding the standard methods to expand your business can help you choose the most effective approach. You’re not bound to using only one of these methods and combined them when suitable. If you find that you have questions on a particular method in business, you might seek help from:
Before consulting with anyone, however, you should understand the basic approaches and what each method entails. Here’s a quick breakdown of common growth and scaling strategies.
Your team, resources, and goals will guide how you select a growth strategy. Here, we will cover four of the most common approaches. These are:
- Market penetration
- Product expansion
- And acquisition
1. Market Penetration
Market penetration is a strategy used when your product already has competitors within a market. The way you succeed in this scenario is to take up a more significant market share than your competitors. You can measure this by revenue or products sold compared to your competitors.
The strategy can be challenging due to the existing competition. What you are bringing to the market may be close to solutions from your competitors, so you will need a strong product and a coordinated marketing team to showcase it. Even though you know where your product is different, you need to translate that knowledge to your customers.
When using a market penetration strategy, you need to provide something that sets you apart from the existing products. These can be extra features or a lower selling price. If you perform market research early in your development, you can find out what the users of your competitors’ products lack with the current solutions.
Diversification, like market penetration strategy, is one of the more challenging approaches. Diversification involves releasing a new product in a different market, which requires extra investment to succeed.
This approach is one of the more challenging strategies because it requires research into a new market. You have to know the new industry well and understand its competitors. Additionally, you have to understand and communicate how this benefits your company more than other available strategies. Otherwise, you risk launching two disjointed products that spread your efforts too thin.
That said, you will find success in this strategy if you know why you want to break into this market. Maybe it overlaps with your current market or adds something to your existing product. Whatever the reason may be, the outcome of this option depends heavily on your company’s strategy and your understanding of your business.
Product expansion is similar to diversification, but rather than broadening your efforts to target a different market, you add features to your existing product to increase your market share.
The strategy is more straightforward than diversification or market penetration because you can leverage your existing knowledge and clients. For example, you can send a survey to your current clients asking for their input on new features. You already have researched your market and its needs. So, if you choose this method, you can pursue it with fewer resources than the above two methods.
Acquisition combines the fundamentals of diversification and market penetration. However, this method is more reliable than the two taken on separately. The reasoning behind it is that rather than entering an entirely new market, you find and procure a company that already has success in the market, knowledge of how it works, and a solution that their clients use.
You can think of this as penetrating a new market without having to start from scratch completely. The financial investment to acquire another business may be steep, so your strategy needs to include a plan to raise funds for purchasing another company.
Steps to scaling your business
A well-thought-out strategy for your business should include elements of both growth and scaling. When is scaling your business, you need to:
- Plan your approach
- Identify your resources
- Fund your plan
- And take action
1. Plan your approach
When you set realistic goals, the rest of the planning flows naturally. Let’s say, for example, that you plan to expand to another area. What do you need to succeed there? Do you understand the market and the differences from your current space? Have you studied how other businesses have performed with similar tactics?
Make sure you outline and ask any questions you have here, and call in an advisor if you’re unsure about how to proceed. They have the skills and experience to guide you through these transitions.
When you’re thinking about your strategy, take some time to go over what indicators you can use to track success. Metrics like overall customer satisfaction with your service, monthly churn if your company runs on subscriptions, or new clients onboarded and help you understand how close you are to achieving your goals. More so, when you look at these together, you get a clearer picture of how sustainable your growth is.
2. Identify your resources
What resources does your company have available? Think about your team, their skills, your technology, and your processes. Here, you’ll want to get specific data on how you’re performing so you can scale it to support the goals you’re reaching for.
For example, if you took on 100 new clients, could your customer support team handle the tickets? If you want to launch a new product, can your marketing team handle the new leads with their current software?
In this step, you can use the metrics that you identified while planning your approach to test these variables. For example, if you have a 10 to 1 ratio of customer service tickets to representatives per hour, you would need to:
- Increase in the number of representatives on your team as tickets increase
- Find better software to help them take on more requests
- Or change your approach to generate fewer tickets
Once you’ve worked out a theoretical model to handle your expected growth, notify the most effective ways to support it. An excellent initial plan prevents complications by anticipating where you’ll need resources and how to get them.
One growth strategy in business is market penetration. A small company uses a market penetration strategy to market existing products within the same space. In this case, growth is measured by the company’s overall market share. Market share is the percent of unit and dollar sales a company holds within a particular market versus all other competitors.
One way to increase market share is by lowering prices. For example, in markets where there is little differentiation among products, a lower price may help a company increase its market share.
3. Fund your plan
Some of these techniques may require low investment, but none of them will require no investment. The plan may include funds for new software or even hiring new employees. In the previous scenario, you’ll find which options will let you handle the new business most efficiently.
Keep in mind that a dollar sign does not always define efficiency. Ultimately, what efficiency boils down to is using your money wisely to invest in solutions that require less maintenance and financial investment over time. For example, paying an employee slightly higher than the going rate and doing what it takes to retain them ultimately cost less than having a higher turnover rate and re-training a new employee from scratch.
When considering funding, look at what other businesses similar to yours are using and investigate new ideas. Investors and grants are two common ways to find financing for your project. You can also enter competitions and look for partnership opportunities. Make sure that you understand the process of applying for these options and what steps they require. That way, you can efficiently use your team’s time and maximize the chances of receiving funding.
4. Take action
Now that you’ve got your plan, resources, and funding lined up, it’s time to take action. At this point, you understand the risks and what to expect. You have identified the guidance you’ll fall back on when you face challenges. Now, Keep looking at your next milestone and revisit your plan often to make sure it’s headed in the right direction.
Frequently revisit your plan to make adjustments rather than waiting for problems to happen. Some scenarios aren’t easily planned for, such as natural disasters or changes to international trade. While you can never plan for everything, you can visualize how you would handle a problem if it came up. This may involve having advisers on hand and knowing where you can slim down if you need to reduce your expenditures.
You can find help from professionals on either a part or full-time basis. Some options include:
Management advisors and business consultants guide you in a specific area of your business. Look for someone with quantifiable results from their past projects. Ask for references, case studies, and other proof of their skills.
Fractional chief operating officers have a higher level of experience and act as a part-time member of your C-suite. Many companies form long-term relationships with these individuals. This option allows for a consistent stream of advice from someone who is invested in your success.
Similarly, the chief marketing officer takes a hands-on role in guiding your company’s decisions. Their specific experience helps them translate your product’s features into selling points and communicate them to your sales and marketing teams. This process reduces any disconnect that could affect your messaging.
Regardless of what’s out there, you’ve got your plan, you’ve got the knowledge, and the only thing missing is action. Any kind of movement is better than none, and mistakes help show you what to avoid, steering you down the path of success.
Good planning is your best defense against the unexpected. By taking the time to understand and create a solid growth strategy, you ensure the future success of your business. Keep your goals clear, your resources managed, and your advances steady. Even when faced with challenges, a well-thought-out approach will make the next steps easy without unnecessary stress.
Remember, there are always resources around to help you. Check up on publications that talk about your industry, strategic planning, and what businesses like yours experience in similar situations. Sometimes, you can use an extra hand to make sure that you were on the right path. Read more here about the specific ways a business advisor can help your company.
Originally published at https://kamyarshah.com.