Every business starts small. With a strong idea and an ambitious team to execute the vision, entrepreneurs can turn their dreams into reality. However, business owners are often surprised to learn that only 2.5% of businesses in Australia employ over 20 people, according to the ABS.
If you’re still in the nascent chapter of your venture, you might wonder how to take your operation to the next level and break free of the “small business” category, which accounts for the vast majority of employers in Australia. Scaling up offers the possibility of both risks and rewards, so it’s crucial to choose a strategy that will help you reach your longstanding goals.
Instead of settling into a plateau, figure out which strategy will accelerate your growth and offer the best chance at lasting success.
1. Market penetration
This growth strategy aims to increase market share for a product or service you already offer or to promote a new product successfully. Methods of penetrating the market include:
- Advertising
- Bundling products
- Offering discounts on bulk orders
- Lowering prices to lure customers from competitors.
New business owners often shy away from lowering their prices. Still, this strategy can be an excellent short-term expansion method, especially for businesses that offer relatively generic products (such as cleaning or office supplies).
Another way to penetrate the market is to couple complementary products and sell them in discounted, convenient packages. Your region might be saturated, but another area might be in desperate need of your products and services.
2. Market development
Instead of bundling products or offering discounts, some small businesses launch their growth by promoting their existing products to new potential customers.
A market development strategy pertains to promoting existing products or services to new customers or launching them in a new geographical area. It might be that your local market has been saturated, or you’re struggling to attract new customers or clients in your region.
For example, a residential solar specialist heard through industry connections that his counterpart in a nearby city was preparing to retire. To fill the void, this savvy business owner made plans to expand his business to that city just as his competitor withdrew from the profession. In short order, he picked up all the clients who previously depended on his counterpart’s services and grew his business substantially.
As you consider the possibilities with this strategy, consider locations far beyond adjacent cities and towns. Some international markets might be a perfect match for your business.
Another way to use this strategy is to find new uses for current products or branch into related markets. A restaurant owner might purchase a food truck to expand services to local events or provide catering services for weddings.
3. Alternative marketing channels
Many small businesses already use more than one channel for reaching potential customers, such as social media platforms, email marketing, video and affiliates for starters. By focusing your marketing efforts on a platform you don’t currently use, your business can tap into new networks and influence alternative audiences.
For example, if you’ve relied solely on organic (non-paid) website traffic in the past, you might consider pay-per-click advertising on Google Ads, Facebook, Amazon or other channels. You might also want to explore re-marketing, which is the practice of serving digital advertisements to people who have previously visited your website or engaged with your business on social media.
Exploring alternative marketing channels and creating efficient digital systems can be a great way to capture low-hanging fruit and grow with speed.
4. Product expansion
Your initial product offering has sold well enough to provide stability but not well enough to expand. If this sounds familiar, product expansion might be your preferred growth strategy.
Small businesses can benefit hugely from expanding product lines or adding new features to appeal to their existing markets. You may be experiencing a lull in sales or profits due to outdated technology or outmoded products. If so, it could be time to expand your product line.
We often see this strategy in the food industry, as tastes tend to follow trends. For example, Murray River Organics found a way to expand its coconut oil line by adding three popular flavours to its selection: ginger, garlic and chilli. In their press release, the company spokesman said, “we’re giving consumers even more reasons to choose coconut oil for their cooking, marinades and dressings.”
That’s the essence of product expansion: giving your customers more reasons to use your products and services.
5. Partnerships
Another way to grow your small business is to partner with another complementary, non-competitive business. You both already have a network of clients, and when you join forces, you can each tap into the other’s existing base.
You might choose to partner through mergers, acquisitions or partnerships, provided the arrangement offers significant benefits to all parties involved. Depending on the industry, the possibilities could include extra resources in personnel, skill sets, technology, property, equipment and knowledge. Such a move might even reduce workloads and commercial risk.
Partnerships often benefit sole traders who share clients and work together in larger projects. For instance, electricians and drywall technicians often create partnerships because they participate in the same construction ventures. Both parties have existing customer bases and can help the other gain traction with new clients and markets. If you choose to establish a partnership to grow your business, make sure you have comprehensive legal documents in place to set boundaries and protect your interests.
Choosing a strategy
In conclusion, a solid growth strategy can inject new life into your small business, no matter your industry. Keep in mind that it’s imperative that you investigate what works well with your specific type of business and then tailor it to your target audience, vision and available resources.
A well-developed growth strategy can win your business a larger share of the market or expand its existing market. Even if you must take a short-term financial hit, your plan can boost you ahead of the competition and position you for long-term success.
We're here to help
If you don’t know where to start, get in touch with us at Ulton - let’s work together to develop a custom growth strategy to expand your reach and accomplish your goals.
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