For the first few years of business, most companies are focused on survival. However, prioritizing the growth of your business is one of the best ways to increase the chances that your company will not only last but also contribute to your economic well-being and a stable financial future.
What can you do to get your business beyond the bare sustenance level? What can you do to turn it into the income-generating powerhouse you envision? Like any element of running a business, there are multiple growth strategies that you can try.
Recapture Existing Customers
Getting new customers isn't the only way to grow your business. Many times, the customers you already have are your best bet for increasing your sales, and studies have found that improving customer retention also improves the value of a company.??
Customers who have already purchased from you once are more likely to do so again, especially if they have a positive customer service experience. Capture the contact information and shopping preferences of one-time customers. Then, use that information to set up marketing systems that will convert them into repeat customers.
Implementing a mix of strategies to both retain old customers and acquire new ones is likely to produce the best growth for most businesses.??
Ask for Referrals
Of course, attracting new customers to your business is never a bad approach. One way to do that is to ask your current customers for referrals.
These customers are already your target market, which means that people in their social or work circles are likely to be your target market as well. This makes them a strong access point to new customers.??
However, assuming that your customers are passing the word about your business isn’t going to increase your customer base. You have to actively seek referrals. Depending on the type and size of your business, you can:
- Ask satisfied customers if they know anyone else who would be interested in your products or services.
- Incentivize referrals with a discount code.
- Encourage customers to share and tag your brand on social media.??
Contain Your Costs
Increasing your bottom line is key to growing your business. If you expand your share of the market but continue to increase your costs, you won't actually have any money left to invest in your business or make a profit.
So while you're looking for ways to grow, pay close attention to the costs associated with running your business and getting your products or services to customers. Lowering these costs can be an effective way to give your business the cash flow it needs to grow and stabilize. There are two main approaches to cutting costs:
- Liquidating low-earning products or eliminating low-performing services
- Improving your inventory turnover through new marketing and sales tactics
Be careful not to cut costs in a way that impacts your customer service or employee satisfaction. Happy customers and enthusiastic employees are both key drivers of business growth. Cutting costs in these areas will ultimately harm your business' ability to expand, even if they give you more cash flow in the short term.
Extend Your Market Reach
There are several ways of growing your business by making your product or service available to a new pool of customers.
- Open stores in new locations: New locations can also be virtual, such as a website with an online store. This allows you to put your product in front of new customers in a new market.
- Target a new demographic: Identify other groups who could also use your product in similar ways to your initial target audience. Once you’ve identified a new market, you can advertise in media that targets that market or create custom marketing campaigns.
- Encourage new uses for your product: Discovering and promoting new ways to use your products or services allows you to encourage existing customers to buy more. It can also help you attract new customers who might need your products for different reasons.
All of these approaches allow you to expand your share of the market. This not only increases sales, but it also makes your business model more stable. When you don't rely on just one type of target customer, you are more likely to survive changes to the market.
Participate in Trade Shows
A strong trade show presence can help you grow your business and establish yourself as a leader in your local industry.
Trade shows draw people who are already interested in the type of product or service you offer. This gives you an opportunity to directly market toward a large group of people who are guaranteed to be in your target audience. Trade shows also give you the benefit of in-person interaction, which increases your ability to connect with and convert potential customers.
Trade shows also allow you to network with other businesses in your industry. This opens the door to new opportunities, promotional campaigns, and collaborations.
Working with these other businesses can help you reach new customers and establish your credentials on a national or even international scale, all of which can help grow your business.
Conquer a Niche Market
If you don't want to expand to new markets or add new services to your revenue stream, you can also grow your business by being very focused on a single niche. This gives you the opportunity to become a "big fish in a small pond."
A niche is a narrowly defined group of customers. Look for a subset of the larger market whose needs are not being met, then concentrate on meeting those unmet needs at a consistently high and accessible level.
To create sustainable growth, select a niche that either:
- Has enough interest that your target market is wide and generates frequent sales
- Allows you to position your products at a high enough price point that you can survive or fewer sales
Diversify Your Products or Services
The key to growing your business through diversification is building on similarities. You want to do one of two things:
- Focus on products/services related to the ones you already sell that address the needs of the customers you already serve.
- Focus on new market segments with similar needs and characteristics to your existing customers.
For example, an artist might also sell frames and framing services. A business that rents mountain bikes in the summer might switch to renting skis and snowshoes in the winter season. Implementing small changes over time can allow you to diversify your products and reach new customers without overextending your business.??
Develop Franchising Opportunities
If you have a successful business and can develop a system that ensures that others can duplicate your success, franchising may be the fast track for growing your business.
Successful franchising depends on having a brand with broad appeal across many geographic areas, as well as a business model that can be easily duplicated.
To create a franchise, you license your business model, process, and branding to franchisees who then sell your branded products and services in their own location, under the same name as your business. This allows you to expand your market reach to new locations, create broader name recognition, and create new revenue from franchise licenses and locations.
Expand to Exporting
Expanding into international markets can also be a powerful boost to your business’s bottom line.
Like franchising, this is a way of growing your business by accessing new customers in diverse geographic locations. However, it also requires a major commitment of time and resources.
Expanding internationally can be legally complex, as you will need to deal with the restrictions of trade and customs laws across multiple countries. You may also need an export license, depending on your product and the country you wish to export to.?? However, if you have the time and resources, exporting your product allows you to grow into markets that were previously inaccessible, creating huge opportunities for growth.
You can find information on export licenses and other legal requirements through the U.S. Customs and Border Patrol.
Choose the Right Growth Strategy for Your Business
Finding the right growth strategy depends on the stage your business is in and the resources you currently have available. Consider what you have to invest, such as money, time, expertise, or personnel, as well as your current market, business goals, and the interests of your customers.
Not every strategy will be right for every business or appeal to every business owner. To get started:
- Pick one or two ideas that are appropriate for your business and your circumstances.
- Create a new business plan based on that strategy.
- Set benchmarks for growth, expenses, and revenue.
- Track these benchmarks regularly to monitor your progress.
While you probably won’t experience growth right away, you will see progress if you continue to implement your plan systematically and consistently. And if one strategy doesn't work, be prepared to step back, create a new plan, and try again.