Statistics show that about half of small businesses fail within the first five years and only one in three survive past 10 years. While these statistics are sobering, they aren’t hopeless. There’s always risk involved when owning a business, but there are ways to improve your chances of success.
Knowing which stage of growth you’re in—and having the right business growth strategies—can help your business not only survive, but thrive. In this post, you will learn the top 3 business strategies for small businesses.
What is a business growth strategy?
A business growth strategy simply represents the methods you use or the actions you take to grow your business from one stage to another.
Business growth means different things to different people. While some consider it an increase in sales and revenue, others interpret it as opening another location or market expansion.
No matter how you define growth, your business growth plan should be based on market research. You must consider your business structure, the product or service you offer, and your target audience. You also want to outline your goals—both short-term and long-term—for business growth at different stages; a timeline to measure progress; and the business growth strategies you intend to use during each phase.
Top 3 Strategies For Small Businesses
#1. Market penetration
This growth strategy primarily aims to increase market share by selling more of your existing products or services in your current market. It’s a low-risk strategy that many small- and medium-sized businesses use.
Here are some market penetration strategies:
- Charge lower prices compared to the competition
- Attract new customers with special offers and discounts
- Encourage current customers to buy more with volume and bulk discounts
- Increase the number of distributors and dealers your business uses
#2. Product expansion
According to Olivia Tan, the co-founder of CocoFax, this growth strategy involves marketing new products and services in your existing market to capture a larger share of the market.
Examples of product expansion include:
- Creating varieties of an existing product; for example, a soft drink company that produces its main soft drink in different flavors
- Updating an existing product when the features are no longer attractive to potential customers
- Introducing a new product line to your business
- Bundling your services into different packages and tiers
#3. Market development or expansion
For a growing company struggling to find its feet in the current market (maybe due to stiff competition), market development is a growth strategy that can help.
Also known as market expansion, it involves selling existing products and services in a new market to increase market share. For best results, you need to have thorough market research to gain a solid understanding of the new market and its customer base.
A few examples of market development include:
- Selling your products or services in another state or country
- Selling to a different group of users or target audience
- Franchising, by giving franchise opportunities to other businesses or individuals