Do you want to grow your business and expand into new markets? What should you think about before committing to a growth strategy? And how can marketing help you drive business growth?
Some small business owners are content to maintain a small operation they can run themselves in return for a decent, but limited, income. Others, however, are driven by the challenge of growing their business into a high-profit venture with a larger market share. Although higher risk, this path can generate greater personal rewards - including the pay-off that might come from selling a profitable concern.
The implications of business growth
A larger firm is likely to be more complex, demanding and time-consuming. It will probably require greater commitment; and you are likely to have to spend more time doing things you don't really enjoy, such as financial planning.
You will probably also have to concede some responsibility or control to others and invest in greater resources, such as larger premises, more equipment and more employees. As the business grows, your costs and management burdens will increase.
Depending on your growth strategy, you may well need funding. Your bank is a starting point but there are other options too:
- Public sector bodies distribute grants linked to social objectives, such as providing employment in deprived areas.
- Business support organisations give out grants and loans for similar reasons. The Carbon Trust, for example, offers an interest-free Energy-Efficiency Loan for investment in energy-efficient improvements.
- Private investors (business angels) could invest in your firm in return for a part-share in the business. They will tend to expect quick returns.
- Friends and family might be willing to lend money.
- Crowd-funding or peer-to-peer lending could be another way to raise finance.
- Asset finance companies will buy your equipment and lease it back to you.
- Invoice finance companies will buy your unpaid invoices from you, helping you raise a lump sum.
When to expand your business?
Don't make the mistake of attempting to grow too soon, but wait until you have a period of successful trading behind you to provide evidence that your business model works. This, perhaps along with some basic market research, will also tell you whether there is enough demand to justify expansion and give you time to put the systems in place to cope with an increase in scale.
Working to a development strategy will help you measure your progress. It should set out your methods, costs, targets and a realistic schedule and you should revise your business plan to incorporate it.
Fast growth is easier to achieve in sectors driven by innovation, and launching new products or services can fuel considerable growth quickly. Most businesses opt for gradual, organic growth that is more manageable and involves less risk. There are a number of well-established strategies:
- Sell more to existing customers. This may involve working harder to build relationships and taking on more sales staff.
- Attract new customers through increased investment in promotion and advertising.
- Expand existing sales channels, or create new ones. This might include, for example, developing an online sales channel.
- Enter new markets. Exporting could be an option, selling beyond your region or aiming your offer at an entirely new set of customers. This may also involve opening up new outlets.
- Introducing new products or services to your marketplace can give you an instant edge - providing you have researched your market thoroughly and have a clear product strategy.
- Introduce new technology to your business. Better equipment can increase your capacity and has the potential to free up staff time if used efficiently.
- Create partnerships with other businesses. Sharing resources and expertise with another business will enable you both to flourish without overstretching yourselves. It also opens the door to public sector contracts.
- Successfully tendering for contracts can stimulate the growth that takes your business to a new level. As you increase your resources, you will be in a better position to win more contracts.
- Networking can introduce you to potential customers, business partners, investors and mentors.
From tiny acorns...
Growth involves risk and commitment; but, well-managed, it should be achievable for most businesses. It will not necessarily happen fast or enable you to retire next year; but every large business started somewhere.