Growth is always a top priority for any business owner. After launching a startup or store, the company figures out how to keep it running. When that happens, the focus then shifts to growing the enterprise.
As an entrepreneur, you’re either one of two things. One, you’ve got a well-formulated strategy for increasing profit yearly in the next decade. Or two, you’re still trying to figure out how much percentage of revenue needs to go up annually and what needs to be done to make that happen.
The Value of Growth
Growth is essential for every company, regardless of its size. It is necessary if a business is to survive and thrive for a long time.
Operations will grow stale without periodic growth. And this can lead to a host of issues like lowered quality standards and poor employee morale.
A growing, financially secure company is less threatened by competitors. That company, too, often enjoys market dominance and can negotiate large-scale purchases favorably.
Effective growth wards off the potentially adverse effects of fluctuations occurring in the marketplace. Plus, a growing company’s high profile often appeals to the most talented job seekers out there.
Reading the Signs
They say "timing is crucial" in growth planning. Of course, your company needs to be ready to take the next step at the right moment. When the time isn't right, investing too much energy, money, and other resources into your business could lead to disaster.
But what does it mean by timing? By checking websites and publications related to your industry, staying up to date with the local and global economy, and networking with others in the same industry, you can find the perfect timing. Here are some of the indicators that signal the best time for moving toward growth which business owners pay close attention to.
- When two companies within the same industry merge.
- The products you sell grow in popularity and new entrants (competitors) seem to be entering the market.
- When other companies put up barriers to entry to prevent rivals from entering the same market.
- The level of sales begins to decline, although most of the time by the time your business enters the decline stage you may have missed the window of opportunity. Still, it is never too late.
A Growing Industies
Each industry has its unique characteristics and growth drivers. While the specific methods and strategies for growth can vary, here are some general ways in which industries can pursue growth:
Research and Development (R&D)
Industries heavily reliant on innovation, such as technology, pharmaceuticals, and biotechnology, invest in R&D to develop new products, services, and technologies. This continuous innovation helps drive growth by meeting evolving customer needs and staying ahead of the competition.
Market Expansion
Industries can seek growth by expanding into new markets, either geographically or by targeting new customer segments. This can involve setting up operations in new regions, adapting products/services to suit local needs, or developing marketing strategies to reach untapped markets.
Strategic Partnerships and Alliances
Collaborating with other companies through partnerships, alliances, or joint ventures can provide opportunities for growth. It allows businesses to leverage each other's strengths, share resources, access new markets or technologies, and benefit from synergies.
Mergers and Acquisitions (M&A)
Industries may experience growth through mergers or acquisitions, where two or more companies combine their operations. M&A activities can lead to increased market share, expanded customer base, economies of scale, or diversification of product/service offerings.
Product/Service Innovation
Industries can drive growth by continuously innovating and improving their products or services. This can involve introducing new features, enhancing quality, increasing functionality, or addressing unmet customer needs. Innovation helps businesses stay competitive and attract new customers.
Digital Transformation
Embracing digital technologies and leveraging digital platforms can drive growth across industries. This may involve implementing e-commerce solutions, adopting automation and AI technologies, digitizing processes, or utilizing data analytics for insights and decision-making.
International Expansion
Industries with global reach can pursue growth by expanding operations into international markets. This can involve establishing subsidiaries or partnerships abroad, adapting products to suit local markets, complying with international regulations, and developing a global distribution network.
Customer-Centric Approaches
Industries can focus on customer acquisition and retention to drive growth. This involves understanding customer preferences, providing excellent customer service, personalizing experiences, and building long-term relationships to generate repeat business and positive word-of-mouth.
Steady Cash Flow
Make sure your company is in a good place financially when preparing for growth. That means having a loyal customer base and a few years of steady revenue. Your brand should also be attracting new customers regularly.
Before taking any significant steps, you should have a few years of regular income and a steady flow of new customers. Finance leader Paco de Leon says that “a consistently growing base of people who want to be customers” is a great indicator of demand. The founder of The Hell Yeah Group, a financial firm for creative entrepreneurs, says that more people coming in will allow a company to grow more sustainably.
Customers Want More
When a company is dealing with more business than it can handle, it is a good candidate for growth. That being said, you should never take sudden spikes as an indicator that demand is high. Remember, this could just be a fluke.
The key is to make sure that you have a consistent demand that you can supply. Pay attention to what your customers want. Are they looking for other items than what you’re offering? Is there a specific product that they want to see in your catalog?
If you aren't selling online already, launching an eCommerce website is a great way to expand your reach cost-effectively. Even a simple eCommerce storefront can allow you to reach and engage with a large number of customers. Over time, your website analytics can help you make smarter purchasing and marketing choices as you can see at a glance what's selling well or what areas you can invest in for maximum growth.
Talk to your customers and get feedback on what they want. While doing this, look for patterns in the responses you get. It’s a good sign when loyal shoppers want more of your product or faster delivery.
Tips for Growth
Successful entrepreneurs know the following principles to grow their businesses sustainably.
Do Your Research
Market research should be the first thing you do when growing your small business. The purpose behind this essential step is twofold.
You gain a better understanding of existing customers’ buying behavior and preferences and insight into what potential buyers might like to see.
It’s crucial to know your target market and what their needs are. The information you gather will then guide your enterprise towards a direction that will be able to meet those specific needs.
Don’t just look into your target audience. Find out what your competitors are up to. Their strengths and weaknesses will inform your decisions and allow you to scale your business appropriately.
Hire the Right People
A solid staff will help you realize your company’s goals. So make sure to get the right person for each job. This entails having a detailed recruitment process and a thorough one where background checks for applicants are standard.
You need to build a solid team that will work with you to reach your goals before you can even begin working toward your company’s growth trajectory.
Having the right people is a surefire way to ensure fast growth. Your business will be better equipped to scale up with a dedicated team. With the right people at the helm, you can confidently delegate tasks to focus on important work. In doing so, you can perform at your best and cultivate a collaborative work culture.
Focus on Established Revenue Sources
Take care of your loyal customers. There are several ways you can do this. For example, you can implement a referral system or create a customer loyalty program. There are also marketing strategies based on previous purchasing behaviors to encourage repeat business.
Form Strategic Partnerships
Entering into strategic partnerships with other companies gives you access to a broader network of customers. You may even form a strategic partnership with a vendor to help expand your business. Regardless of the type of partnership you form, you must manage business relationships and maintain effective vendor relationships.
Reduce Risks
The bid for growth is always a risky endeavor. Fortunately, there are things you can do to limit both internal and external threats. One vital resource that you can tap into is business insurance.
A small company is more susceptible to disruptions that could cause it to collapse if not mitigated. Employee data theft and leaked product designs can destroy the very foundation of your business. These problems can generate high costs. They can also erode customer confidence and loyalty.
Business insurance will help you recover from such losses. The right product will even cover the cost of remediation and lawsuits.
Creating new products and services is a part of business growth. You’ll need equipment to mass-produce new merchandise and space to store them. You will need the financial bandwidth to increase your operating and distribution footprint.
If you already have insurance, it would be wise to review your policy to ensure that you have the right coverage to support your growth plans. It could be tempting to skip on this. But really, the last thing you want is to realize you’ve outgrown your coverage and end up paying much more money just to upgrade.
Recap
Growth is something every business owner aspires to achieve. However, growing your business can be daunting in the best of times.
Timing is crucial to any growth plan. It’s essential to be aware of the signs that might tell when the opportunity is ripe for scaling up your enterprise.
Finally, hiring the right people and forming strategic partnerships will go a long way in helping your company reach its growth goals.
Implementing a growth plan is not without risk. Thus, mitigate those risks by focusing on established revenue resources and getting the right business insurance product.
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