Want to Grow Your Business? You Need a Growth Strategy
What is Growth Strategy?
A growth strategy is a plan to grow a company in size and profitability. It includes the methods and tactics that will be used to achieve such growth, such as product or service updates, new markets or customer segments, and partnerships.
Most businesses must grow in order to survive. You can purchase a product or service, but if you’re selling it and there’s no economic or demographic growth, you’ll eventually go out of business. Growth is tricky because it usually has a different meaning to different people.
However, one thing is certain: no matter whether the growth strategy is short-term or long-term, the success of your business depends on how it’s executed, and therefore providing an effective growth strategy is the first thing that can affect your business’ performance.
Growth strategy isn’t something that you engineer or create. It’s something that happens naturally and organically.
Often, you can’t see it in the beginning because it takes time to play out. For example, if your business is growing because of an infrastructure that’s already in place – the foundation for growth is already there. The same goes for an infrastructure that needs to be created.
Types of Growth Strategies
1. Product development strategy:
This usually refers to a product or service that is developed to meet the needs of a new market.
This is when a company creates a new product or redesigns an old one in order to meet additional needs of existing customers or convert them from non-paying customers to paying ones.
The most prominent example would be the Apple iPod, which was designed to compete in the digital music market.
In order for it to be successful, however, it had to incorporate certain technological advances that are not found in competing products.
2. Target Market Strategy:
This strategy is used when a company targets specific markets or customer segments. For example, Coca-Cola has developed various products and distributed them in different parts of the world.
3. Vertical integration strategy:
This is when a company contracts out its production to other businesses that specialize in certain areas.
For example, many companies will contract out their accounts payable functions to a third party because they don’t usually possess the expertise that’s needed to perform this task most effectively.
4. Merger and acquisitions strategy:
A company that wants to grow quickly may decide that it needs a merger or acquisition in order to gain access to certain resources.
5. Market Development Strategy:
This strategy is used when a company expands into new geographic markets. A marketing team should be in place to determine the best way to approach new markets.
6. Strategic partnerships:
Any time you contract with another company, you’re forming a strategic partnership. The more strategic your partnerships are, the better they will be for growing your business.
7. Cost cutting strategy:
This is usually a short-term and tactical strategy. It’s typically used when the company must reduce costs in order to sustain its growth rate.
8. Sales strategy:
With this strategy, a company targets or markets to specific customers in order to achieve the best possible return on investment.
9. Market penetration strategy:
This is used when a company wants to penetrate into new markets and compete with existing players who are already established in the market.
10. Customer retention strategy:
This is used when a company wants to increase the number of long-term customers who are loyal to them and less likely to switch brands.
11. Product development strategy:
This is when a company develops a new product or service that will better meet the needs of its customers.
12. Market entry strategy:
This is used by a company when it wants to enter new markets or expand into existing ones to increase the number of customers and therefore increase revenues.
13. Expansion strategy:
This is used when a company wants to expand into new regions or countries.
There are many other types of growth strategies, but these are some of the most common ones. Once you’ve identified which one can best help your business, you can begin implementing it right away.
So How Do You Develop a Growth Strategy?
The most important thing to remember is that growth strategies are not created in isolation. You’ll need to develop them alongside your overall strategy.
They’re an essential component of a company’s overall success, but they’re not something that you design or engineer.
Growth strategies are organic and will require input from many different people and functions within the company – such as sales, marketing, finance, production, quality control and management.
Want to Grow Your Business? You Need a Growth Strategy
To start thinking about a strategy, you’ll need to define the problem that your company is trying to solve.
This will help you complete a SWOT analysis, which includes the strengths, weaknesses and opportunities of the company.
Answering these three questions – What is it? Where does it stand? And who are our customers or clients? – will give you some direction for your growth strategy.
Your growth strategy should be a tangible plan that’s grounded in fact and reality – not fantasy. As such, it should be based on forecasts that you can use to calculate when and how the strategy will work.
The basic idea is to create a growth plan that you know and understand.
How Do You Implement a Growth Strategy?
How do you put the growth strategy into place? There are several ways to do it. For example:
You could change your products and services by adding new features to attract new customers
You could change your distribution channels or create new ones. That is, you can make additional product offerings available through different websites and mobile applications, or make some of them available in new locations
You can improve quality, as well as reduce price and increase convenience for your customers. For example, you could introduce new technologies or processes that make your offerings more attractive to buyers
You could also change the way your company markets its products and services. You could work with a new agency or develop a new marketing plan
There are dozens of ways to grow your business – the best strategy for your business depends on many different aspects, such as the industry that you’re in and the size of your company.
For example, that bigger and more established companies might benefit from acquisitions or mergers, while smaller businesses will often have to focus on efficiency, which may require the use of a new technology.
The Bottom Line:
Growth is a complicated process for business because in order for it to work, all aspects of your business must work in concert.
You can’t just look at your business as a single entity – each part of your business must grow together and at the same time. You might need a growth strategy that focuses on one part of your business at a time.
But the most important thing to remember is that growth strategies are organic, and they’ll require input from many different groups within your company.
They’re not something that you engineer or create – they happen naturally and organically.
Finally, while it’s true that no matter whether the growth strategy is short-term or long-term, the success of your business depends on how it’s executed.
