Some businesses start out on a small scale because they wish to maintain operations at a small level. However, other start out small because they have limited resources but in the long run, they do wish to turn their small businesses into bigger corporations. Research suggests that this happens rarely; mostly because, small business owners fail to adopt proper growth strategies, resulting in wasting resources.
You, as a small business owner, need to realize that turning a small business into a high profit venture is quite a difficult task but not impossible. It will increase your financial burden and you will need to put in a lot more efforts and time. All these efforts and increased time input would only achieve growth if you adopt well thought out and well planned growth strategies. Here are some basic categories of growth strategies that you can choose from your small business expansion:
1. Intensive Growth Strategies
These growth strategies require little effort and pose little risk for a good amount of growth. These are the easiest to conduct and should be adopted as the first step towards growth, once you have accomplished all basic levels of small businesses success. These strategies include:
- Selling more of your current products and services to existing customers
- Selling your existing product portfolio to a different market niche
- Using different methods of approaching customers. If you are an offline business, try investing in an online marketing campaign
- Introducing new, innovative products to your existing market while looking out for new markets to target
- Creating new products for a new market. Sometimes, some products just do not work for a particular market. You have to introduce new products and services if you want to enter a new market.
2. Acquisitive Growth Strategies
These growth strategies focus on growth through acquisitions. These are very high risk strategies and chances of a successful acquisition are quite low. Before adopting these strategies, make sure that you have sufficient finances and you have assessed all risks of the acquisition. There are two types of acquisitions:
- Vertical Acquisitions: where you either acquire your supplier’s business or your retail customer business to take over its share of profits in the supply chain.
- Horizontal Acquisitions: where you buy your competitor’s business to take over their market share.
3. Diversification Strategies:
These strategies are the most risky form of growth because you are entering into a completely new business sector. Diversification can be done by acquiring a business that is absolutely unrelated to your business and making it work. This is risky simply because you are new to the business. You do not know anything about the products and services, the marketing practices and the target markets. Before adopting this strategy, make sure that you have researched it thoroughly before taking the huge financial plunge.
You can select any of these business growth strategies, depending on what your skills are and how many resources you have. To begin with, start with low risk intensive strategies and become an expert in your sector. Once that is accomplished, you can move on to riskier acquisitive and diversification strategies depending on what your core competencies are.