In our previous guide, we looked at 4 Amazing Secrets to Craft a Wonderful Vision Statement . In this guide, we shall be discussing in details 6 Perfect Strategies to Achieve the Best Business Growth.
Today’s world of business is fast-growing and key factors that would help keep a business moving forward and fast are growth strategies and the outcome of these strategies. With the cutthroat competitive environment businesses are facing today, there is a need to adopt growth strategies to scale your business.
Businesses aim to use their resources efficiently in order to gain an advantage over their competition. However, with the need to grow comes many other issues such as consumers, competitors, financial institutions, trade unions, technological issues, political factors, just to name a few.
We have prepared this guide to fill an important gap – to provide a clear and helpful walk-through to would-be entrepreneurs, to learn how to start businesses from scratch and scale, within the shortest minimal time. It is written in a simplified manner and contain important nitty gritties to get all growth aspects covered.
Growth in Business
High growth successful startups stand out from the rest not by accident, but from sheer hard work and determination. They win by acting out of the norm. Any business can dramatically enhance its chances of profitability and growth by doing the right things.
Successful high ventures take a holistic view of the business. Every aspect, unit and department is important. For such businesses, it not just sufficient to have a great product or service.
Entrepreneurs do not just build successful ventures by themselves. They do it in combination with their customers, partners, suppliers and employees.
Although luck may play some element in the process of their business achievements, attention to detail and a deliberate strategy to improve work for such businesses.
Strategy is a fundamental management tool for any organization looking to gain any form of competitive advantage. It provides a match between an organization’s resources, skills, environmental opportunities as well as a balance on risks.
In business, we use the term growth to refer to various aspects such as an increase in total sales volume, increase in employment, and increase in production capacity among others.
Then comes an important term; strategic growth. It refers to the ongoing process of evaluating and controlling a business as well as the industry in which the company is involved, to access competitors, set goals and strategies and mitigate all threats coming from existing and potential competitors.
A growth strategy refers to a strategic plan that is formulated and implemented for expanding the performance of a firm. One of the most respected model to assist with analyzing growth strategy is Porter’s Five Forces Model.
It is a model that attempts to minimally assess and review potential levels of profitability, opportunities as well as risks based on five primary factors within an industry.
However, form keen research and evaluation, we can present to you the following key growth strategies any organization should use, to gain competitive advantage.
Product Development Strategy
With this strategy, a firm tries to grow by developing improved products for the present market. It is one of the most suitable growth strategies as it concerns product development and market development.
By developing new products for existing customers, businesses can evolve from having an established core activity into a more complex business. Businesses should pursue product innovation strategies in emerging markets as well as carrying out marketing innovation strategies in mature niche markets.
Market Penetration Strategy
Market penetration is a growth strategy that is aimed at increasing the existing share of products and markets of a firm. It is a strategy that aims at increasing the sake of present product in the present market through aggressive forms of promotion.
A firm aims at penetrating deeper into the market to capture a larger share of the market. This form of growth requires expanding what a firm is doing currently to a more potential customer.
You need to note that a business enterprise cannot serve the entire market with a particular product or service because of the diverse customer wants and needs.
Your startup needs to identify a specific segment of a market it can serve best. A market segment consists of a large identifiable group with similar wants, purchasing power and other attributes.
Once a startup has identified a specific market segment to serve, the next key step is to position the service in the market place.
Market Development Strategy
With this strategy, a startup aims to respond to new market opportunities. This is done by introducing existing products to new markets or customer groups.
This strategy implies increasing sales by selling present products in the new markets. Market development is very important as it leads to an increase in sales of existing products in unexplained markets.
In case a startup decides to diversify, it works on introducing new products to this new market.
Another interesting growth strategy is a marketing strategy. Marketing is most effective when it becomes an integral component of a business strategy. Marketing defines how an organization aspires to engage with her customers, prospects as well as dealing with cutthroat competition.
Marketing is as important as production, cash flow, financing and any other key aspect in a business. Any startup that develops a sound marketing plan gets an economic advantage over those who don’t.
Pricing strategy is where large and small businesses compete in terms of rating pricing in the market, with the aim of winning over customers. Pricing is an essential component of marketing.
Businesses compete in placing favourable prices to their customers all aimed at retaining their customers and attracting other potential customers through networking.
Lower prices can lead to higher demand, and thus commanding a large market. Pricing strategy has to be exercised with caution because customers may perceive lower pricing on an item as an indication of poor standard.
Quality Customer Service
Quality customer service is a general comparison made between customer expectations about service and their perception of the way the service has been performed.
For a startup to secure customer satisfaction and loyalty, it must aspire to secure high-quality products and services. This form of satisfaction calls for relational marketing.
Relational marketing is the philosophy of doing business that places a key focus on improving current customers rather than acquiring new ones.
Startups need to see customers as their long term partners and should aim at making commitments to maintain relationships by offering quality services and through innovation.
Additionally, startups need to set and measure service standards. Setting ad reviewing can play a key role in driving quality performance and can pay off by turning a normal customer into a loyal one.
Human Resource Strategy
People are vital for an organizations growth and overall performance No good startup can afford to divorce its employees as they are vital its growth.
The ability of a startup to growth will largely depend on its employees’ skills, motivation and ability to deliver in offering superior services to customers.
Employees represent an organization and have a direct influence on customer satisfaction. Employees additionally perform other services such as marketing.
It is important for a startup to carefully recruit, train and mentors its employees as doing so will directly contribute to improved productivity and service quality.
Principles of High Growth Entrepreneurial Ventures
Most businesses do not gain the traction to move into a high growth phase. For some entrepreneurs, probably they intend to keep their business small while allowing it to generate acceptable incomes for themselves and perhaps their family, that’s fine.
However, there are others who would like it to grow but don’t know-how. Waiting for high growth to occur is hardly a proactive strategy. High growth happens when you set yourself out to create a business which satisfies a key number of principles.
Finding the right place, right time
Businesses that succeed in achieving high growth rates are always created and supported by a significant environmental change normally soon or after the change has occurred.
High growth typically happens because there is an emerging need which cannot be satisfied by existing businesses. This gap creates a vacuum in which startups and existing firms recognize and must work on providing a solution quicker than others can.
Entering a market at the right time is critical in gaining traction and seizing market share as well setting up protection from competitors. Timing is not everything, but is surely helps.
Finding the compelling need to buy
Achieving high growth is mostly about gaining the right momentum in a chosen market. The greatest source of friction in a growth curve is embedded in the decision- making the process of target customers.
It can get to the extent that prospects choose not to buy, may choose to delay a purchase or choose to go for an alternative product.
Combined with external factors such as economic cycles, business interruptions, natural disasters etc, all these may impact the willingness of a customer to buy.
When a product or service is being offered for sale, it must have a compelling value proposition to the customer. The value proposition can be composed of various elements such as design, taste, image, smell among others and all these should be compelling enough to influence a customer to but.
Targeting the right customer
Successful high growth companies have a very distinct definition of their target customer. They know exactly what problems they are solving and they have a clear understanding of how and where to deliver a sales message to the customer in a way that creates a positive impact.
Startups need to understand that the sales process is proactive. Marketing messages need to go out and touch the target customer. You should not wait for customers to find out about your firm. Provide a solution to anything a customer wants to be done.
To create a high growth startup, you must target a specific customer who has a problem that needs to be solved. This customer is either positively identified by their name, address etc, or you are willing to initiate a marketing approach to identify all possible customers.
You can also reach your customers through an established or readily built distribution channel, be it a subscription magazine, specific speciality store, credit card member directory among others.
To generate the needed rate of growth, a startup must be able to project the rate of sales of its products and services.
Developing Channels to Market
No matter how good your product or service is, you must place your offering to places where your customers are found, else you are doomed to fail.
Just like you would use freshworks turn visitors into leads and customers into happy, engaged users, same applies to targeting the right customers for your business.
Any startup that has the intention to grow, especially if it intends to grow aggressively must find channels to market their products and services.
The channels of marketing are mostly determined by the price of a product or service. A lowly priced product must achieve significant volumes of sales to generate the required growth magnitudes. With lowly priced product, few companies develop their distribution channels. Instead, they opt to work through established distribution channels.
Lower priced products that demand a higher service component or higher product/service knowledge often utilize a franchising model.
Innovation as the driver
Innovation, be it in the side of product, process of a business concept, can enable a startup to step away from the pack and secure a greater level of control over its business outcomes.
A business that does the same thing as other businesses on the block will be forced to compete on price. To avoid competing on price, startups need to establish a basis of competition which is fueled by innovation.
The biggest thing killing most new businesses today is being copies of similar businesses. Such businesses use the same products and services to compete along the same dimensions as their market counterparts.
This leads to dividing an existing market among new businesses further dwindling on revenue. Firms that have low growth have generally captured a small stagnant market and fully secured it through customer loyalty.
For any new business to stand out and grow rapidly, it must be ready to innovate. Don’t settle for mediocre, be the leader.
Building in Sustainability
Many entrepreneurs think that their business is sufficiently protected just because they have a superior product or service. However, you need to build sustainability which is achieved through a combination of features and functions which customers value such as superior customer service, availability of your products, after-sales support among others.
A well-established business will gain a competitive advantage at a certain stage in time. However, the real challenge for any established business is to build a platform which will protect your competitive advantage and ensure the business remains on top of its competitors.
Protecting a business is what we would otherwise call erecting barriers to entry. Such barrier to entry targets protecting your distribution channel, the revenue you get from your customers and your source of supply.
Strong barriers to entry create the basis of a suitable competitive advantage and this can help your business set itself for high growth. If your business has invented something it needs protection on legal rights which is attached to patents and licenses.
Many products or service business look great when the volumes are small or when the founders are directly involved in delivering customer service.
However, when the business grows certain aspects of the business need to be redesigned. Businesses that handle volumes of requests everyday needs to be redesigned to handle customer requests. Key questions you need to fill include the areas of having the right people, right structure and resources.
Another thing that any startup needs to be ready for is the fact that it may inevitably face a management crisis as it grows. When you grow fast, you need to build growth capability and capacity.
Established businesses have a huge advantage over startups when it comes to engineering growth in their business. Such firms have resources and can pull other vital resources and stakeholders together to facilitate growth.
Startups are not to be overlooked too. Even at their early stage, with the right management teams and financial resources, they stand a chance to succeed. There are a couple of flaws startups need to avoid to stand a better chance for success and growth.
First, startups need to have a proven product, which can be achieved through product-market fit. Second, startups need to be constituted by an experienced management team. They need to fill all the gaps existing in management.
Additionally, even with a developing market, any startup will stand a better chance to succeed and grow if they can establish a good market. Startups should work on addressing common failures such as the unwillingness of customers to pay for their products and services, insufficient demand, inability to deliver promised functionality, inability to deliver at the required cost or quality levels, institutional barriers to doing what is required and competitive failures.
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