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3 Business Growth Strategies That Will Surely Pay off

Rahul Maingi

By admin, October 31, 2018

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From a remote bookkeeping service provider to a garment manufacturing company, one of the utmost objectives of every business is to grow and become the most recognizable name in their industry. Every entrepreneur dreams of making it big and enjoying long-term success. Very exciting, isn’t it? But, the question is – How?

According to Innovation, Science & Economic Development Canada statistics, approximately 7000 businesses fail because of bankruptcy every year in Canada. Additionally, about 96% of small businesses that enter the market survive for a year, 85% survive for three years and only 70% survive for five years.

With this data, one thing is clear that growth is essential for the survival of a business or else it may face the same consequence as the said 7000. And for growth, you must have an effective strategy.

Let our virtual bookkeepers help you in preparing a proper plan to grow your business. Here are three growth strategies that will surely pay off.

1) Market Penetration

Market penetration is the strategy that carries the lowest amount of risk

Market penetration is the strategy that carries the lowest amount of risk but can yield profitable results. It involves focusing on selling your existing products or services in the current market to gain a higher market share. To implement this strategy:

• Reduce the selling price of your products or services to attract new customers at a lower price and increase sales. However, price adjustment should be implemented judiciously as overdoing it can lead to damaging effects.
• Increase promotion of your products or services by employing other means apart from conventional forms of advertising. It should be linked with price adjustment strategy to raise brand awareness and generate profit to maximize their market share.
• Make distribution channel wider and more stable to increase your chances of reaching more customers and acquiring a bigger market share. Consider getting into a partnership and strengthen your relationship with them so that they continue working with you.
• Improve the quality of your products or services for a high market penetration in the target market. With a high-quality product, your business will be able to beat your competitors, thus leading to increased sales.

2) Market Development or Expansion

market development is about expanding the market for business growth
Unlike a market penetration strategy that involves growing the business by entering into the existing market without changing its size, market development is about expanding the market for business growth. This is a beneficial growth strategy for small businesses who find it difficult to become a part of the current market. It involves targeting non-buying customers in currently targeted segments. But, you should make sure that you don’t alienate your current customers. Here’s what you should do for market expansion.
• Enter new segments of the market such as geographic segments, demographic segments and psychographic segments.
• Repackage your product to open a whole new market, say if a company is manufacturing industrial cleaning products in a container of 10 litres, it could be repackaged in smaller quantities to target the domestic market.
• Look for new distribution channels to sell the same products or services that your competitors are offering but with a different approach to a new set of customers. For example, turn into an online retailer instead of a high street retailer to target a new segment.

3) Diversification

Diversification strategy refers to entering into a new market
Diversification strategy refers to entering into a new market, where the business doesn’t currently operate, by creating a new product or service for the market to be entered. This strategy poses a higher risk for a business as it requires an investment of a significant amount of resources, just like starting a new business. This plan is often followed by companies that are not satisfied with their current results of operations and need to grow. You can implement this plan by using either of the two types of diversification.

• Conglomerate diversification is for those businesses that have limited opportunities in the current market. They can diversify into areas that are totally unrelated to their existing business. For example, if a computer company wants to diversify its business for growth, it can get into producing notebooks which is unrelated but can increase the profitability and growth rate of the company.
• Concentric diversification refers to expanding the business by adding products or services related to its current offerings. For example, if a company is manufacturing office supplies, it can diversify its business by buying another company that manufactures paper or ballpoint pen.

Business growth is not easy, especially for small businesses. You need to have proper strategies and be active to implement them in your business operations. The above-mentioned business growth strategies are worth trying as they will definitely help you in achieving long-term success. You can learn some more strategies by talking to our bookkeeping experts at Virtuous Bookkeeping.

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