How do I grow my business? It’s a common question I often hear from leaders.
There is no shortage of stories about those who have successfully grown their businesses. It’s natural to want to be one of those stories.
Here are three ways you can help grow your business and write your own story along the way.
#1) Clarify the “Grow what” and the “Grow why.”
Don’t just assume you need to grow everything: revenue, market share, profit. Here’s why: Some years back, one of the major automakers decided to cut product lines and shut down production facilities. Unsurprisingly, this resulted in less revenue, fewer unit sales, and a loss in market share. Why would they do that? To realize a significant jump in profitability. Shrinking the unprofitable helped to make them more profitable.
Speaking of which, consider Amazon. Before the introduction of Prime, profitability was not their primary concern. Why? Because they wanted to grow market share and become the de facto place to go to buy things online. To do this, they needed to provide access to a wide range of products, offer rapid and reliable delivery, and sell as cheaply as possible.
Before you talk about growing your company, get very clear on the “Grow what” and the “Grow Why.” Is there a strategic reason for what you want to grow and why you want to grow it?
#2) Understand the Risks
When you’re so enamoured with the idea of growing your business, you might go full speed down the path without realizing what the risks are. For example:
- You take on too much debt, and then you’re exposed. One cataclysmic event could put you out of business.
- You have more infrastructure than your growth can Now you’ve compromised profitability.
- You have too little infrastructure while you grow your company, and you can’t meet your customer commitments.
It’s essential to consider both risks and consequences when you commit to growing your company.
#3) Grow stronger
Yes, there is something you should always try to grow. And that is, grow stronger. Your competitors are getting tougher, your customers are wanting more, and technology is always changing. Growing stronger is something you should always do, whether you are a big business, a mid-size enterprise, or a small start-up.
Growing stronger can be accomplished by:
- continually improving your processes
- getting closer to your customers
- engaging your people
- evolving your offerings
If you want to grow your business, first commit to growing stronger. Then ask, “What else should we want to grow, why, and how?
Types of Business Growth
Deciding what to grow in your business — smart growth — also means clearly understanding why and clearly thinking through how.
If you’re in the early stages of your company, for example, with clear goals and a small team, your growth model might simply focus on growing revenues. If your company is at a more mature stage in its lifecycle, it can become more complex.
When determining how to grow your company, it’s vital that you take a systematic approach, considering the market environment and your internal capabilities and resources.
Here are the five types of business growth strategies to consider when looking at how to expand your business.
- Market penetration – To grow your business and gain market share, you differentiate yourself from your competitors by better meeting the market needs. This is accomplished through a unique value proposition, cost leadership, market segmentation, or focusing on an underserved niche.
- Audience expansion – To grow your company in the face of market saturation, stiff competition, or slow growth, you offer your product or services in a new geographical area. This can be accomplished, for example, by partnering with distributors who have established networks, or offering franchise options for entrepreneurs.
- Product line expansion – To grow your business, you offer variations of your core product line so you can extend your reach and create a deeper relationship with your audience. For example, you could create a premium version that serves the luxury market segment. Targeting a new subsegment of the market allows you to engage in a more personalized manner.
- Product and Market Diversification – Considered a riskier growth strategy to grow your company, this method involves selling a new product to a new market, at times unrelated to your core business. It requires substantial research and a solid financial commitment. It should be implemented with caution as the market may not react as anticipated.
- Acquisitions & Mergers – Using this strategy to grow your business requires you to clearly understand the risks, rewards, and requirements. It can be used to expand your market reach or to establish a dominant position within your market.
Growing your business may require that you use a combination of growth strategies. The strategy you choose will vary depending on what aligns best with your vision and goals.
Take 2 minutes. Reflect on what all this means for your company, in particular your growth ambitions. Then, record one thing you will do to make it happen.
Make it Happen.