How to Grow Your Business – I
Chiamaka Oguonu is a management consultant in the Advisory practice…
“Don’t be afraid to give up the good to go for the great.” John D. Rockefeller
Growth always involves a process of change. The decision to grow a business is one that will involve new ways of thinking and doing things. Business growth can either be organic or inorganic. Inorganic growth describes a situation where a business merges with another one or a big business acquires a smaller one. Organic growth, however, is a situation where a business works towards increasing their number of customers, sales/ revenue, etc. on its own by adopting new strategies that will give them competitive advantage in the market1. Organic growth may occur in four ways –
- Market Penetration
- Market Development
- Product Development and
In order to adopt any of these strategies, It is imperative to answer two fundamental questions:
- Who is your target market? This means clearly defining your focus market. Do you want to serve a niche segment or the entire population? Even if you decide to go with the entire population, you may still need to develop products and/or clearly define services for every customer profile that you identify. For instance, I recently came across a fashion designer that caters only to high end customers e.g. celebrities, politicians etc. This suggests that whatever the business does in terms of strategy will be to devise more creative ways of capturing that segment.
- How far do you want to go? By how much do you want to grow? To answer this question means to clearly set growth targets. Do you know the size of the market you have chosen to play in? What share of the market do you want to control in terms of percentages? It is important to be specific in setting these goals so that it helps you as a business owner to assess your position at the end of the period. Do you want just 100 more customers by the end of the year? What is the potential sales you aspire to make given your targeted 100 new customers?
Once these questions are addressed, the business can then begin to define its growth strategy. The focus of this article will be on market penetration as a growth strategy. Market penetration simply means increasing marketing efforts of products and services in the current market of business operation. This can be done in at least four of the following ways:
- Price adjustments: This entails lowering prices to attract certain segments or could mean offering premium prices in order to penetrate another segment of your target market. This may be in form of student or employee discounts in order to attract students to patronise your product/service. It could also mean repackaging the product or refining the service proposition to distinct customer segments to be offered at different prices. For instance, the case of a top FMCG company in Nigeria who has two different brands of the same product (milk) to cater to different segments of the market.
- Distribution Channels: Who are your target market and how can you get your product/service to them? What channels do you currently use to distribute or initiate sales for your products? In this digital age, one way to grow will definitely involve having a digital presence i.e. mobile and social media. Other approaches may include launching a website to have an online store. Depending on the cost structure of the business, this can be rolled out in phases. The first stage could be signing on to a digital platform or online marketplace to give the business first access to market. As sales picks up, the business could decide to host their own website. Furthermore, depending on your target market and type of business, you may also wish to open up more physical outlets in strategic locations. This however may come at a higher cost than other channels but the business can also take advantage of shared spaces, pop-up outlets, or stalls at business expos/ exhibitions.
- Promotions: For a small business, this often proves helpful in raising top of mind awareness for the products/ services offered and this can be done in various ways. For example by leveraging on the power of social media giveaways where friends can tag their friends on the business social media to use your product/ service. Also, the business can take advantage of festive periods where certain products will be in high demands to run sales promotions which will boost sales turnover.
- Loyalty rewards: The world we live in today is very competitive. Today’s consumer is more informed and as such, can easily switch at any point in time. Thus, small businesses must appreciate a loyal customer because it is a conscious choice for the customer to repeat patronage. Hence, the business must focus on building a strong customer service experience and never underestimate the power of referrals. Once a customer has encountered exceptional service, it is important for the business to convert that customer from a satisfied one to a promoter of the business product and brand. To do this, the business can incentivize the customer through loyalty rewards which can be translatable to value for the customer. For example, a bank in Nigeria has offered free taxi rides to customers on their 6th ride provided they have pay with the bank’s card.
It is important to note that each of these strategies has its own level of risk and cost implications. Therefore, the business owner has to decide the level of risk and cost he or she is willing to bear at a particular point in time. In identifying risks, also make sure to develop plans to mitigate them. If the business decides to go with a less expensive strategy, you must ensure not to compromise on your service promise or quality to the customer. Growth strategies defined. http://study.com/academy/course/index.html, accessed 2017