We all know starting and running a small business isn’t easy. It’s a fact that 20% of small businesses fail during their first two years of operations, and if you somehow got past those dreadful two years, you may join the 45% of businesses that fail during the first five years if you don’t grow.
It’s crucial for small businesses to have a comprehensive growth strategy from the start. If not, your small business could struggle to generate more customers, and sooner or later your competitors will outpace you and steal your clientele.
Thinking about developing a growth strategy for your small business, but don’t know where to start? You’ve come to the right place.
Below, we will share some of the most effective strategies for small business growth that you can put into practice right away.
Let us begin with number one:
1. Pick the right growth methodology
What actually is growth? In the sense of business terms, we can define growth as an increase in revenue, but we can actually achieve growth in various different ways.
However, out of all growth strategies available, there are actually only four basic methodologies to choose from:
- Market penetration: to sell more of your existing products/services to your existing markets. Simply put, attract customers away from your competitors and/or encourage your existing customers to buy more often from you.
- Market development: selling your existing products/services to new markets. For example, expanding your business in different locations.
- Product development: selling new products or services to your existing markets. Can be an update of your existing product (i.e. new iPhone every year) or brand new products.
- Diversification: launching brand new products/services on new markets. This is considered the riskiest methodology but can be very rewarding when successful.
Choose the right growth methodology based on your small business’s objectives, your current target audience, and potential market opportunities to leverage.
Obviously, you can use more than one methodology in planning your growth strategy, but in general, it’s best to focus on just one, maximum of two methodologies.
2. Narrow down your markets
One of the biggest challenges for small businesses is when they are forced to compete with larger enterprises. So, it’s very important for small businesses to focus on a smaller market segment and reevaluate who their ideal audience should be.
You can segment your existing target market into smaller ones based on demographics (i.e. age, occupation), behaviors/psychographics, buying habits, and more. The idea is to focus your effort on highly targeted potential customers, which is typically easier and more cost-effective than casting your nets wide to target everyone.
Also, you can always market different products to different target customers if you offer more than one product. Conduct careful market research (i.e. surveys, competitive analysis) to identify which market segments are most ideal for your small business growth.
3. Make it as easy as possible to purchase from you online
In today’s internet age, you can’t grow if you don’t have a powerful enough online presence.
It’s crucial to have a professional-looking and functional website on top of substantial followers on relevant social media networks. However, it’s also important to make sure it’s as easy as possible for your customers to find your business and purchase things from you online.
If you are a small business targeting local customers, make sure to claim and optimize your Google My Business listing so you can rank on Google Maps.
If you are a product-based business, then you should set up eCommerce functionalities on your website. Platforms like Shopify now make it very easy and affordable to set up an eCommerce store, and there are also various other solutions available.
If you are selling services, then make sure you provide functional and reliable online reservation functions on your website and relevant social media networks. You can easily integrate a reservation and booking system to start receiving online reservations immediately.
Make sure everything is optimized (mobile-friendly, optimal page speed, etc.), and eliminate as many obstacles as you can to ensure a streamlined experience.
4. Build strategic and win-win partnerships
Partner with other businesses in your area (non-competing, but sometimes partnering with competing brands can also be beneficial) so you can gain access to these businesses’ audiences and vice versa.
The secret here is to find the right businesses to partner with. Businesses that offer products/services complementary to yours are good candidates, but we also need to make sure that the partnership would benefit both parties.
Also, look beyond cross-promotion when partnering with other businesses. For example, it might be possible to combine your resources to create a new product or project together. You can also host an event together to promote both of your brands.
5. Maximize customer retention
While the focus of growth is typically about acquiring new customers, don’t forget the importance of maintaining your existing customers and keeping them happy.
In fact, it’s much more expensive to acquire a new customer rather than convincing an existing customer to make another purchase or renew their subscriptions. Thus, retaining customers can significantly help in increasing not only your revenue but your profits.
Start simple by showing appreciation: send a thank you email after they’ve made a purchase, send a birthday/holiday greeting, and so on. Also, it’s important for them to feel that they are being heard, so you can ask your customers for their feedback and encourage them to leave reviews.
Maintain their loyalty by offering special/limited-time products and a chance to get your newest product before anyone else. Everyone loves exclusivity.
Achieving growth for your small business is definitely not impossible, but you’ll need the right growth strategy, patience, and hard work.
Although your growth won’t happen overnight, by staying committed you’ll reap the results of your hard work and grow your small business to get more revenue, customers, and profits.