Three strategies to drive business growth
Increase sales through diversification, market development, or product development.
It's a common scenario. Once you've been in business for a while, you notice your sales are flat. You need to grow in order to stay competitive, but it's easy to get stuck if you don't have a solid growth strategy in place.
Get on the path to growth with one of three tried-and-true strategies: You could provide new products or services to new customers, sell existing products in new markets, or offer new products to current customers.
Here's what you should know about each approach to growing your business.
#1. Diversification: New products or services to new customers
Sometimes, there just isn't enough demand among existing customers to grow your business. If that's the case, your best bet might be selling something new to a new customer base.
For example, an accounting firm that specializes in tax preparation may seek to diversify by offering additional services, such as wealth management or estate planning. By expanding outside its core competency, it can reach new customers. Broader offerings allow for greater growth potential.
Still know that this approach isn't without risks. "Diversification, as defined as introducing new products into new markets, is a risky strategy because you don't know whether the new product or service you're introducing and the new customers you're pursuing will pay off," says small business strategist Jackie Nagel, president of Synnovatia, a small business consultancy in San Pedro, California. "A strategy of diversification typically requires you to spend more on market research and product development. You've got to have the resources to be able to afford the risk."
#2. Market development: Existing products or services to new customers
Alternatively, you may opt to enter a new market, which involves introducing your existing products or services to new customers. Those new customers could be in a different geographical area than you currently serve, or they could be a different demographic.
If you own a lawn care business that serves residential homeowners, for instance, you could start pitching your services to businesses or corporations. Customers need what you already offer, which may require an investment in sales and marketing, but not in product development. Your firm already has the equipment and trained staff, so your main hurdle would be getting your name out to prospective customers in the business world.
#3. Product or service development: New products or services to existing customers
Another strategy is product or service development. Instead of introducing existing products or services to new customers, you develop new products or services for existing customers.
Let's say you own a small manufacturing firm that produces airplane components. Because you understand your customers — large aerospace companies — and their evolving needs, you are ideally positioned to expand your product line. Your insights into their supply chain, pain points, and preferences give you an important advantage over your competitors.
"For most businesses, product development is probably one of the best growth strategies because it doesn't carry a lot of risk," Nagel says. "You're tapping into a marketplace that you already know, and that makes things a lot easier, especially from a sales and marketing standpoint."
Using any or all of these three business growth strategies can help you breathe new excitement — not to mention revenue — into your business.
Leverage our business plan resources to help chart your path to growth.