Running a small business can be an all-consuming task. But just because you have a to-do list that’s longer than War and Peace, it doesn’t mean you can afford to skip the important step of creating a growth strategy.
If you think you don’t have time to create a small business growth strategy, consider this: A few hours of strategic planning now could save you hundreds of hours of wasted time in the months and years to come.
It could get you focused on the right things, and it could help your business to grow much more quickly and generate more profits, so that you can hire people to help you with that to-do list instead of slowly drowning under it by yourself.
In this tutorial, you’ll learn exactly what a small business growth strategy is, why it’s important to have one, and how you can go about creating one. You’ll learn about some of the different paths to growth and how you can decide which one is right for your business.
1. What Is a Small Business Growth Strategy?
First of all, let’s get clear about what we’re talking about here. A small business growth strategy is simply a plan that outlines how your company can get from where it is today to where you want it to be.
Does that sound like a regular business plan? There are certainly some similarities. But, as I wrote in my tutorial on business plans, there are lots of different components to a business plan, such as financial plans, organizational structures, competitive analysis, and more.
A business plan tends to have a broader focus, and often it’s intended at least partly for an external audience such as a bank or investor, so you need to spend time describing your company and what it does.
Your growth strategy, on the other hand, is just for you, and it’s entirely focused on how you plan to grow:
- Where will you get new customers from?
- How will you expand into new markets?
- What new products could you offer?
That kind of thing. Think of it as the big-picture strategic thinking that will inform much of the content of your business plan.
2. Understand the Different Paths to Growth
So how can your company grow? There are several different approaches you could take, and we’ll look at some of the main paths to small business growth in this section. Here are six growth paths you can plan for:
2.1. More Customers
This is pretty simple, and it’s probably what you’re already doing right now. It just involves staying in your existing market, with your existing product range, and finding more customers for those products.
If you choose this path, you’ll probably focus intensely on marketing and advertising, as well as thinking about different pricing or promotional strategies you could use to reach more people.
The good thing about being a small business is that you’ve probably got plenty of room to grow with just this simple strategy. Unless you’re in a tiny niche, there are probably lots more potential customers out there for you to reach.
Market saturation-the point at which it becomes tough to find new customers -is unlikely to be an issue for quite a while.
2.2. More Money From Existing Customers
Although finding new customers is a simple concept, it can be hard to do in practice. So it’s also worth exploring how you can make more money from your existing customers.
After all, these are people who have already bought from you. You know that they’re interested, you have their contact details, and you already have (hopefully) positive brand recognition. It should be much easier to make a sale.
If you want to explore this path to growth, you’ll need to brainstorm about what you can offer your existing clients that they don’t already have. Are there follow-up services you can offer, or add-on products that go well with what they already have? Is there a way for you to convert them from one-time customers to regular customers, for example through a subscription-based service?
Whereas the first path was about increasing market share, you may sometimes hear this one referred to as increasing wallet share.
2.3. Offer New Products
Another way to grow is simply to offer more stuff. I’m calling what you offer
“products”, but this doesn’t necessarily mean physical products-they could also be services or digital products.
For example, Envato, the company that runs Tuts+, started out back in 2006 with one product: a marketplace for selling Flash assets. It grew by offering more things, like WordPress themes, unlimited graphic templates subscription, the tutorials and courses you’ll find on this site, and much more.
This path to growth can help you with the others we’ve discussed too-if you’re offering more things, it’s easier to find more customers and make more from existing ones. If you choose this path, then invest time in product development, discovering what your customers want, and seeking out new trends in your industry.
2.4. Enter New Markets
If you’re currently operating only in your own country, you can grow quickly by expanding internationally-assuming your products are appropriate for shipping overseas. Or even if your products are already available internationally, you can make more effort to reach new markets by translating your content into new languages and investing in true internationalization of your website.
Entering new markets could also mean something closer to home, such as opening up a new store in a nearby town. It all depends on your business and what you offer.
2.5. Open New Distribution Channels
This one is about expanding the ways in which you reach people. If your business is currently a bricks-and-mortar company, opening an eCommerce website is a new sales channel. Or perhaps you could explore having your products sold in retail stores, or on other company’s websites, or by affiliates. There are lots of possibilities here.
2.6. Buy Other Businesses
If you have the funds available, this option can be the rocket fuel for your growth strategy. When done right, an acquisition of another business can advance you along some of the other paths to growth in a fraction of the time.
For example, offering new products could involve a long process of product development, testing, refining, marketing, and more. And after all that, the new offering may still not take off. But if you buy a company that already offers different products, you get ready-made access to a proven product range. You also get new customers, and possibly access to new markets or distribution channels.
3. Where Are You Coming From?
So which path or paths do you choose? To start making that decision, you need to get a clear picture of where you are right now.
Set aside some time, either by yourself or with key members of your management team, and define the current state of affairs. Ask questions such as:
- What are your company’s strengths and weaknesses?
- What’s the competitive landscape like?
- What are some of the risks you face in your industry, or threats to your business model? What are the main opportunities?
- How much funding do you have available?
4. Where Are You Going?
Next, you need to get a big-picture idea of where you want to go. Here are some questions that can get you started:
- What’s important to you? What are your business’s values?
- Do you have a passion for doing one particular thing well, or do you want a more diverse business?
- Do you want to grow as quickly as possible, or do you want to focus on slow but sustainable growth?
5. Pick a Path (Or Paths)
Return to the different paths from section 2 with this new information about your business in mind, and choose which path or paths you want to take.
For example, if you are worried about your existing business model coming under threat from technological changes, you could plan to develop new products. This path worked for Envato-the original Flash marketplace closed down in 2015 as web designers moved away from using Flash, but the other marketplaces thrived and the business kept growing.
If, on the other hand, your business does one thing well and you can see it continuing to do that for many years in the future, then perhaps staying focused on that one product and maximizing the number of customers you reach is the best path.
Deciding whether to pursue the acquisition path will depend largely on whether you have the funds available or can find ways to raise debt or equity capital. But it also may depend on your business’s values and the destination you outlined in the last step. Acquisitions can sometimes change the culture of your business, depending on the business you acquire and how you integrate it, so you may prefer to pursue an organic path to growth.
As you look at your options, keep in mind that the paths to growth are not mutually exclusive, and it’s perfectly fine to pursue several of them at once. For example, you could plan to develop new products while also looking at ways to make more money from existing ones. You could enter new markets and also explore new distribution channels.
6. Plan It Out
Now that you’ve picked a general growth path to follow, it’s time to make a more detailed plan.
Make an overall goal, and then break it down into specific action items and objectives with clear deadlines.
For example, if you’ve decided that offering more products is your path to growth, decide what those products will be (or at least what ideas are worth exploring further).
Then, pick your first new product. Consider:
- How long will it take you to develop it?
- What about market research and testing?
- How soon can you launch?
- What is your marketing plan?
Put clear deadlines on all of these activities, being realistic about how much you can do on top of all your other work.
And then break each item down into even smaller steps, again with clear objectives and deadlines. It’s easy for long-term strategic plans to get lost in the shuffle of more urgent (but less valuable) day-to-day activities, so the idea is to keep you focused on the activities that will deliver the long-term growth you want.
Try to plan some quick actions you can take for immediate gains (such as a simple addition to an existing product that you can offer without much additional work), as well as longer-term goals (such as developing an entirely new product from scratch).
In this tutorial, you’ve learned about the importance of a small business growth strategy. You’ve seen some of the main paths to growth that a small business can take, and you’ve learned how to evaluate them and choose the right one for your company. Then you’ve seen how to put it all together and make more detailed plans.
One last thing to remember is that you should plan to always keep planning. Strategic plans need to change with changing circumstances, so you’ll need to take the time to return to the plan in the future-at least once a year, and possibly more often for fast-moving businesses.
You probably won’t need to spend as much time on these periodic updates as you do on the initial plan, because so much of it is already in place and you won’t be starting from scratch. But it’s important to keep returning to it and making adjustments to ensure that it’s still relevant and meets your current needs.
This process also keeps growth at the forefront of your mind and can get you back on track if you’ve relapsed into spending all your time on day-to-day problem-solving.