By Jenna Illies
Your small business needs different strategies to increase its overall performance. These strategies can have many different focuses, including:
- Avoiding risks
- Introducing an innovation
- Increasing sustainability
- Maintaining successful customer relations
Each new marketing strategy introduced to a company should support its growth. Developing a growth strategy may sound complicated, but it’s simpler than you think. We recommend you follow this guide to have your business grow in no time!
So, how can you develop the right growth strategy for your small business?
1. Analysis of Business Needs
First things first, work out what your business needs are. What does your business need to do to pursue growth and expansion? Before making any plans, your small business must be stable with a secured income. Be sure that you are confident and comfortable with the way your business is performing prior to making any expansion plans. Square Dashboard can help you keep on track with your business management.
Next, identify trends in your industry. What are customers interested in, and how are they behaving? What are your direct and indirect competitors doing? Business owners need to think like an entrepreneur and brainstorm how to remain relevant in the market. Look out for gaps in the market that your company could fill to achieve its growth objectives.
Your business needs should align with building brand awareness and relevance in the eyes of your customers. Your small business must ensure a high-quality customer experience and add value to clients.
2. Analysis of Expected Outcomes
Next, work towards developing measurable, time-bound goals to evaluate how your small business is growing. These goals act as a road map to mark small successes along the way to achieving your long-term aim. Each of these goals should have a thorough plan and detailed information on how your business owners can reach them.
Your small business must grow at a sustainable rate throughout this stage – don’t strain your company and damage it in the long run. Every business has to take risks, but the risks should be calculated and not harm the overall business health.
3. How to Achieve Business Outcomes
One way for your small business to achieve growth could involve revamping your marketing strategy to focus on market penetration. This involves selling more products and services to existing customers – through lowering the price, offering discounts, improving innovation, or increasing advertising. Consider introducing Square Loyalty to encourage repeat purchase from your existing customers.
Market development is also a way of achieving growth in your company. This is where you sell existing products and services to customers in a new market. This means that you may need to expand or update your business in order to increase the acquisition of customers – consider franchising or merging to increase growth.
Don’t be afraid of branching out into alternative channels to grow your small business. It’s tempting to use a familiar channel, but using multiple channels has the advantage of increasing exposure of your products. This makes it easier for your customers to find your company.
Product development is another useful growth strategy. Innovate new products for your existing customers to widen your product portfolio and increase customer satisfaction and brand loyalty. Selling new products to existing customers is also less risky than selling new products to new customers.
Lastly, you could focus on market dictation and offer new products to new customers. This would be suitable if your existing products and services do not match customer needs in a new market. To attract these customers, you need to develop new products to suit their needs.
4. Assessment of Available Resources
Before embarking on your acquisition of growth, assess the resources you have available to make sure that your plan is financially feasible, and growth can continue at a sustainable pace.
Consider your small business finances when deciding which objective to take – each market objective has a different price tag so it’s important to select the most viable means of growth.
If you’re confident that the growth opportunity will be successful, you could consider alternative funding for resources. Financing, partnership, merger, and equity are just some of the ways that your company could obtain extra resources. Remember to use a source that has the lowest cost but highest returns.
5. Identification of Measurable Parameters
Your small business should have a variety of parameters that can measure its growth. Square Analytics can help you to measure these parameters.
Some useful parameters to use include:
- Sales revenue – If your sales revenue increases, then your company growth strategies are working. A stagnation or drop in sales revenue would mean that your company should adjust or replace its growth strategies.
Sales net margin – If your sales margin is meeting all expenses and the remaining amount keeps on increasing, then your growth strategies are working. A negative balance implies that the growth strategies are unsuccessful.
- Cost of customer acquisition – The cost of acquiring a new customer should not exceed the value that the customer brings to your company. If so, then re-evaluate your growth strategy.
- Customer turnover – An efficient growth strategy should enable your company to attract and retain customers. If you keep on losing your new customers to the competition, then your growth strategy may need a re-evaluation.
- Net promoter score – This score measures customer satisfaction and collects feedback from customers.
- Monthly website traffic – Traffic shows that customers are interested in your products and services. Increasing website traffic implies that your growth strategy is effective.
6. Development of Key Indicators
The use of key indicators can help you measure the overall growth of your small business. Similar to the measurable parameters, choose a variety of key indicators that show that your business is growing. Some key indicators include:
- Inventory running low – If your inventory keeps running out, then you know that your business is performing well.
- Need to hire new employees – Increased activities that require extra employees show the business is performing well. Square Team Management can help with managing new employees.
- Improved cash flow – When money keeps on coming in and out of your business it suggests your company is working successfully.
- Company buzz – Social hype around your business and interest from clients, investors and stakeholders suggests that your company is successful.
7. Evaluation of Sustainability of the Outcomes
A sustainable business growth strategy must protect your company resources while meeting the needs of the business and its stakeholders. Simply put, the outcomes of your growth strategy should not deplete resources that your small business will need in the future.
When you develop a strategy, you should consider the inputs that contribute to its success in the market. A successful growth strategy should feature a cycle that turns its output into its input – this is autonomous, meaning that it’ll never rely on other strategic areas for its inputs.
A sustainable growth strategy ensures a long-term, positive effect on your small business. It’s essential to incorporate elements that guarantee business sustainability for the future.
8. Assessment of the Flexibility of the Identified Growth Strategies
When developing the right growth strategy for your business, check how flexible it is. How easy would it be to adapt the strategy? An efficient growth strategy should allow for future adjustment.
It’s important to account for the fact that some parts of a growth strategy are not as flexible as others. The cost of adjusting your strategy, the participation of stakeholders, as well as the effect on the rest of your small business are sometimes outside of your control.
The right growth strategy for your business needs to be sustainable with clear, measurable goals. You’ll know your business is starting to grow when your measurable parameters are increasing and your performance indicators are positive.
*Retail Insider partnered with Square for this content.