Growing your small business into a big business is no simple task. It takes dedication and a specific plan of action to turn the vision you have of what your business could be into a reality.
The trouble is that while most business owners can see the end goal, they have no realistic strategy in place for actually achieving successful growth. Understanding the corporate growth strategies that actually work can mean the difference between your business' success and failure.
There are several corporate growth strategies available. While all these strategies have merit, there may be one that is more relevant and effective for your particular industry, product, and market. Understanding what each strategy entails is important to choosing a method that will work for your needs.
1. Market Penetration
This method is the simplest, and typically the most common as it has lower risk than other corporate growth strategies. It requires a company to market the existing product to the same market it has been targeting, but requires an increase in market share. This may mean lowering prices to create great differentiation between the company's product and a competitor, or using another strategy to capture a larger market share in order to better penetrate the market.
In some cases, this strategy may not work, specifically if your business operates within an over saturated market. There may not be room for your business to increase market share, which is where some of the other strategies come in.
2. Market Expansion
As the name implies, this strategy requires expanding your company beyond its current market. This may mean either finding a new target audience who would need your product, or finding new uses for your current product that could expand its reach.
This method is also highly effective and requires low risk, because there is no new product being developed. The only thing that is changing is the audience you are targeting to buy your existing product.
3. Product Expansion
If there is really no room for growth when it comes to expanding your business with the product you have, it may be time to expand your product line. Creating a new product generates more opportunities to to sell a to your current audience, while increasing your revenue.
Producing a product that makes sense for your current customers is a great way to expand your business because you are already familiar with your customer base and their needs.
One of the riskiest corporate growth strategies, diversification is when a company sells new products to a whole new market. This requires involved planning and research to ensure that this method will have positive results for your business.
It is particularly risky because it is almost as if you were creating a whole new business again. With product expansion you are at least able to use the research and knowledge you have about your current customers to generate and market a new product they will actually use. With diversification you do not have that luxury.
Finally, if you're serious about growth, acquisitions may be the right move for you. Acquisition means purchasing and absorbing a competitor to expand your business. Of course this is not a decision to be made lightly and may not be realistic for your business depending on the circumstances, but it can allow your company to absorb a previous competitor which provides you access to that company's existing customers.
This method allows businesses to grow at a much more rapid pace than the other four methods, but it is also costly and time consuming.
All of these corporate growth strategies can be used to grow your revenue and your business. While each one requires careful planning and execution, it is imperative to find realistic ways to achieve your company's goals, otherwise your business will remain stagnant.