If you’re a regular reader of this blog, then you know that we like to take a subject and worry over it for a bit like a dog with a bone, before we consider any other topics. This usually results in a series of articles talking about a specific area of running a business or a specific concern.
We do this because like to approach things from as many angles as we possibly can (thus, a dog with a bone reference) before burying it for good. Since our last instalment focused on the various types of business growth strategies that businesses typically tend to create, this time out we’ll try to explain how to create a business growth strategy.
Why Do You Need To Create A Business Growth Strategy?
This is a common enough question. You may know that you need to create a business growth strategy because “it is good for your business” but do you know why it is good for your business? After all, can’t you just pick up some generic business growth strategy and implement it? In fact, why can’t you adopt the same business growth strategy that your competitors are following?
The reason for this is that it won’t work for you. Generic business growth strategies are too generic to be useful to any single business. Such a strategy may require skill sets or resources that you don’t possess. It may be designed for a business at a particular developmental stage that your business hasn’t reached yet. The same reasons apply to adopted business growth strategies as well.
If this is the case, then why did we bother to give you a list of the different types of business growth strategies in our last instalment? That post was a primer for business owners and entrepreneurs so that they understand what business growth strategies look like from the broader perspective. This post, however, will teach those same people how to create a business growth strategy that will fit their business like a glove. Here are the requisite steps.
Step #1: Solidify Your Existing Income Streams
Let’s be honest here folks. If you’re trying to create a business growth strategy without having any steady and reliable revenue and income stream, then you don’t really deserve to be running a business because you don’t even have the basics spot on. In fact, if this is the case, then you might as well go back to the drawing board, join some management classes, get a new mentor, and possibly get a job somewhere.
Consolidation is the foundation of any kind of growth strategy. This is true across the board, irrespective of which industry you operate in, what type of business you have, and even at what scale you operate on. Consolidating your revenue and income streams serves the purpose of solidifying your position in the market.
The objective of building such a foundation is twofold. On the one hand, it will allow you to have a safety net to fall back on in case you create a business growth strategy that doesn’t pan out the way you imagine it to, while on the other, it will act as a springboard from which you can launch your next effort.
Furthermore, understanding your existing revenue stream means that you also know what is required to maintain them. Hence, solidifying your revenue stream will give you an idea of to what extent you can use your existing resources towards the growth venture.
Step #2: Determine Your Value Proposition
Referring to our previous post again, all business growth strategies are based around a value proposition, regardless of whether they are market penetration, market expansion, product expansion, sector diversification, or expertise acquisition strategies.
For example, if you create a business growth strategy around market penetration principles, then you’ll most probably be relying on offering lower prices to capture a greater market share.
Similarly, if you create a business growth strategy around market expansion principles, then you’re trying to leverage first entrant benefits i.e. lack of sufficient competition within the market.
Creating a business growth strategy around product expansion principles means that you plan on developing either a completely unique product or an existing type of product with a feature never seen before.
In the case of a business growth strategy based on the concept of sector diversification, your value proposition will be internal in nature because you’ll be trying to either leverage some kind of business expertise or some form of cost benefit arising out of vertical or lateral integration.
Finally, if you create a business growth strategy by using expertise acquisition principles, then the expertise you acquire itself becomes your value proposition to the consumer or client.
Step #3: Define Your Target Audience or Market
It doesn’t matter what all the management consultants specialising in marketing tell you. You can’t create demand for any product or service and expect it to sustain your business for an extended period of time.
All the multinational companies that have employed this strategy have done so on the back of foundations that they’ve laid in other lateral or vertical industries. There’s literally no business in the world that has used such a strategy in its early stages and lived to tell the tale about it.
Our aim of stating all this is that you cannot create a business growth strategy worth a penny without defining your target audience or identifying your market. Identifying the market and defining target audience is an exercise in imagining the kind of people who’ll need your product or service. Typically, this exercise requires you to use economic, demographic, psychographic, and social variables and parameters.
Step #4: Analyse and Evaluate Your Competition
However, this doesn’t mean that the businesses in question don’t have any available avenues for growth.
Such businesses have two options open to them. They can either hire expensive management consultants to show them the way towards growth or analyse and evaluate the competition in the same sector.
Often enough, the most successful business in a sector also displays highly developed growth strategies. Owing to this, it is always a good idea to consider what the more successful competitors are doing before you create a business growth strategy for your own business.
Step #5: Leverage Your Strengths; Nullify Your Weaknesses
Their analyses show that they should be growing because the market is favourable but they aren’t because of some reason.
In the majority of cases, this reason is nothing but the fact that the business, itself, is unable to use the favourable market conditions due to one reason or another.
In other words, some weakness of the business, itself, is keeping it from succeeding and growing. When you create a business growth strategy, you will need to assess your business’s strengths and weaknesses very seriously. In fact, your business’s strengths and weaknesses should feature heavily in your business growth strategy.
Your business growth strategy should essentially leverage your primary strengths while trying to nullify your worst weaknesses. This is one of the easiest ways of checking the viability of a business growth strategy.
For instance, the best business growth strategies will hinge the most on your strengths. In reality, however, business growth strategies are a cocktail that require businesses to develop new capabilities and skill sets.
Therefore, you should try to ensure that your business growth strategy incorporate as many of your strengths as possible and as few of your weaknesses as you can manage.