Business growth strategies are a way for companies to achieve their goals. The right strategy can increase revenue, profits and shareholder value.
There are many different types of business growth strategies, so it is important to choose the one that best suits your company. These include market development, product diversification and mergers & acquisitions.
Mergers & Acquisitions
One of the most common business growth strategies is mergers and acquisitions. These transactions typically involve combining two companies that are similar in size and recognize their mutual advantages in terms of sales, efficiencies, and capabilities.
M&A can be a powerful tool for delivering growth at a much faster rate than organic means. However, success with these deals often depends on a careful planning and integration process.
To get started, business leaders should identify the gaps in their corporate ambitions and opportunities for M&A to fill them. This can be done through a self-assessment and market assessment.
The self-assessment helps business leaders evaluate the scalability of their competitive advantage, and the market assessment helps them understand their competitors’ likely reactions to a potential transaction. The two assessments work together to create an M&A blueprint that guides the pursuit of strategic value-creation through M&A.
Deals that are successful start with a well-defined strategy, and a clear understanding of the firm’s strengths, weaknesses, and future prospects. They also focus on developing the emerging culture and brand of the new merged company, and carefully shaping it to generate organic growth.
Market development is a business growth strategy that focuses on introducing an existing product to a new market. It involves a variety of strategies, including expanding geographically or offering discounts to attract potential customers who haven’t bought from you before.
Choosing the best market development strategy depends on your company’s overall goals and priorities, and how much risk you want to take on. For example, if your goal is to increase annual profits, you might decide to hire more people or double the amount of product sales in each location you open.
A market development strategy may also involve repricing your products to fit the needs of a different audience segment’s average budget. Or it could mean targeting competitor customers or trying a new approach to generating leads.
Market development is a complex process, and it’s important to make sure all of your team members understand the goals you’re working toward. Communicate clearly and offer to answer questions they might have. Journal your activities to document important details and ensure that stakeholders have a clear picture of what you’re doing.
Product diversification is a business growth strategy where companies shift their product lines to increase marketability and brand presence. This can be done by expanding their current market with new products, or by filling in gaps with a new line of higher- or lower-end products.
In addition to boosting revenue and market share, product diversification can help businesses survive in the face of economic uncertainty. However, companies should only pursue product diversification when they can afford the initial costs of entering the market.
One of the most common types of diversification is horizontal, where companies develop a new line of products that are closely related to their existing lines. This type of diversification allows a company to leverage their existing resources and know-how.
Another type of diversification is vertical, where a company diversifies into a specific industry. This can protect them from disruptions in the supply chain and reduce their dependency on suppliers.
Finally, concentric diversification can allow a company to use their technical expertise to enter new markets and differentiate themselves. For example, a VoIP provider could expand their brand by offering a VoIP platform tailored specifically to the contact center industry.
Diversification is a complex strategy that involves careful planning. The most successful organizations will employ a diversified growth strategy that enables them to maintain their core competencies and grow at an efficient pace.
New Distribution Channels
New distribution channels are a business growth strategy that helps companies reach a wide range of customers. Using this strategy can help you launch a new product or service to a large audience, grow your revenue quickly and speed up cash flow.
New distribution channels can also be used to increase customer satisfaction, reduce costs and improve the overall customer experience. Often, companies choose new distribution channels based on their future business goals.
For example, companies may select a distribution channel based on the size of the market they want to enter or how they plan to expand their existing business. Alternatively, companies may choose a channel based on its profitability potential.
A distribution channel can include many intermediaries and may be offline or online, depending on the company’s specific business model. These intermediaries can be distributors, wholesalers, retailers and agents.
Regardless of the channel selected, companies should make sure they are working with the right distributors to meet their specific needs. For instance, a wholesaler might be the best choice for a manufacturer who needs to stock a large number of products in their warehouse. However, a retailer might be better suited for a company that only sells a few products in a store.
Business leaders need to constantly adapt and implement new processes in order to remain competitive. This includes integrating technology across all aspects of the company and responding to any regulatory changes.
Businesses that aren’t able to do this often suffer from bottlenecks that prevent them from scaling and growing their operations effectively. These bottlenecks can occur at all levels of an operation, from the ground up to the leadership team and beyond.
Changing the way a business operates may seem overwhelming, but it’s necessary for growth. Without it, a business could become uncompetitive and fall behind its rivals.
The Cambridge Dictionary defines organizational change as “the process of altering an organization’s structure, goals, culture and management to better support its mission.”
There are two types of changes: adaptive and transformational. Adaptive changes are small, incremental adjustments that management makes to execute on strategic business initiatives.
Transformational changes are larger changes that fundamentally alter a company’s culture, strategy, structure and governance to support business goals. These changes are often fueled by external forces, such as the emergence of a disruptive competitor or an issue impacting the supply chain.
Operational change managers work closely with senior managers and other key stakeholders to ensure that changes are implemented smoothly and efficiently. They also coordinate training efforts to help employees understand the new changes and adjust to them.
Investments in Other Companies
There are many ways to grow a small business, but there is one that is often overlooked. While it is not the first thing that comes to mind when you are thinking of growing your company, the right strategy can lead to a smoother running operation with fewer headaches for the employees involved. Among the most common ways to achieve this is through capital investment. In a world where the competition is stiff, finding the best deal and retaining a healthy portion of that capital to grow your company is key to success.
Focusing on a Small Segment of Industry
Focusing on a small segment of industry is a strategy that allows companies to narrow their focus. This approach can be helpful for businesses that are looking to improve their market share and expand their customer base. It also can be beneficial for companies that are trying to compete with larger competitors.
As with any growth strategy, focusing on a small segment of industry requires careful research. You’ll need to know your target audience, their needs, and your business goals. This way, you can develop a plan to reach your goals and maximize your results.
The best way to find out which industries are a good fit for your company is to do market research. This will allow you to learn more about your current customers and identify potential new ones.
Once you’ve identified an area to focus on, you can create a growth strategy that fits your budget, timelines, and calculated market share targets. This can include a variety of strategies, such as product development and expansion, or the acquisition of a competitor. As with any strategy, you should continuously evaluate your efforts and optimize them based on results. This will help your business grow and thrive in the long run.