There are a few things in business that are optional especially if you intend to keep the doors open and the lights on. Business growth is NOT one of them. Growing a business in any economy is not for the faint of heart. Growing a business — minus a strategy — is a major drain on your resources triggered by half-baked decisions.
To paraphrase author, Richard Rumelt, in his book Good Strategy Bad Strategy: The Difference and Why It Matters, setting strategy is not a game of establishing goals. Strategy is how your organization moves forward. Strategy is the craft of figuring out what is worth pursuing with the capability of accomplishing. It’s a cohesive approach to moving forward that requires you to say "no" more often than "yes" to what lies ahead.
Show Us Your Growth Strategy
When asked which strategy is ideal for your small business, the not so very satisfying answer is — that depends . .
Strategy is an area in which one-size-fits-all doesn’t work. In fact, when crafting a strategy that is the right fit for you and your small business, there are several aspects to consider.
Our friends at the Houston Small Business Chronicle suggest using the PESTLE analysis when identifying a clear business strategy. PESTLE stands for political, economic, sociological, technological, legal, and environment. Taking these considerations under advisement, combined with your mission and vision, helps identify the potential opportunities and threats that ultimately influence your selection of strategy.
Common Core Strategies: The Big Four
Although there are different types of business strategies available, you want to select the growth strategy most appropriate for your business. In the absence of a full analysis and customization of your business strategy, you may find it helpful to select one of the most commonly known strategies.
- Diversify – Does “don’t put all your eggs in one basket” ring a bell? If so, that sums up the diversify strategy. Developing new products in new markets can be a riskier strategy given the unproven marketplace. However, if innovation is a business value (think Apple, Inc.) it may be worth the risk as long as you understand what’s at stake. Strap on your tool belt for this strategy, though. New skills and knowledge required for success.
- Market Development – One of the more common growth strategies selected by many a mature entrepreneur is to expand existing products into new markets. It makes sense. Once you’ve proven your business offering in one market, your acquired knowledge and skill can potentially support growth in a new market. The new market may be industry-related or geographical. This type of transition doesn’t happen without proper planning, however. A keen understanding of the new markets — and its competitors — is important if you’re going to make head way.
- Product Development – Probably one of the most comfortable strategies for entrepreneurs is introducing new products into existing market. This is commonly called the product development strategy and mirrors the market development strategy. It requires a keen eye and detailed-attention to pay attention to the ever-changing needs of your clients to figure out what innovation they are ready to adopt. Even if it appears to be an easier strategy to implement, it doesn’t come without challenges. New business skills and continual tweaking are needed until success is achieved.
On Strategy does a nice job of poking the brain cells with their product development strategy teaser. Here are a few ways to extend your current offering:
- Adapt (to other ideas and developments)
- Modify (change color, motion, sound, odor, form, shape)
- Magnify (more for a higher price, stronger, longer, extra value)
- Reduce (smaller, trial version, shorter, lighter)
- Substitute (other ingredients, processes, power)
- Combine (other options, products, ideas, assortments)
- Market Penetration – What’s an entrepreneur to do when new products and/or new markets don’t exist? When surrendering is not an option, expanding your current products in your current market is the way to go. Be prepared to do battle, though, should you adopt this strategy. In order to snag a larger piece of the pie, you’ll be seizing some of your competitor’s market share. They may not take kindly to that.
As you can see, there’s a bit more than wishful thinking when it comes to business growth. However, setting aside some time to conduct a thorough analysis and custom-design your business strategy can certainly give you a leg up on growing your business.