While you’ll occasionally meet a business or business owner that is perfectly content with zero percent growth, embracing a “why rock the boat” kind of attitude, almost everyone else will be scrambling to find ways to grow quickly and sustainably. After all, growth is the key to continued success in all areas of life – especially business.
Of course, wanting business growth and actually achieving business growth are two very different things.
While you can quickly make “gains” in your business, tracking the number of followers on social media or the percentage of conversions down to the decimal points, real growth doesn’t happen overnight with “hacks” revealed in YouTube videos or bought in a free-plus-shipping type of offer. In order for your business to truly grow in a sustainable, evergreen type of way, you need to actually implement a real strategy. While it might not be fast or easy, these strategies are really the barrier to entry for most successful businesses and business owners.
Knock down the barrier to real growth and success is inevitable.
The majority of businesses enjoy rapid growth during their first years in existence, giving business owners the false impression that everything will continue on this upward trend for the foreseeable future. This, of course, is not the case, and any seasoned business owner will knowingly smile and nod when a brand-new business boasts 300% growth.
That experienced owner knows that, in just a few short years, everything will change.
In order to keep up, business owners need to understand what real growth strategies are. And, once that knowledge is safely stored under their belt, they then must do the important work: implementation. Failure to implement a proven growth strategy for your business will either cause it to close up shop or will leave you in the land of zero percent growth.
What is a Real Growth Strategy vs a Growth Hack?
By most definitions, a proven growth strategy begins with an intelligent plan of action. This plan of action gives businesses a blueprint for cornering a larger market share. Occasionally, growth strategies cause a business to take a short-term hit, but the long-term benefits greatly outweigh any momentary discomfort. Depending on the business itself, including factors like its target market and current finances, the type of growth strategy recommended will vary.
A “growth hack,” on the other hand, is at best like a tactic that can help drive your strategy forward — but that’s only if you’re following an actual strategy. So many businesses suffer in the long run because all they implement are tactical hacks with no clear course or vision of where they’re going.
The Five Main Strategies for Sustainable Business Growth
Unlike tactics or hacks, there aren’t thousands of business growth strategies to choose from. In a world of information-overload, it’s a relief that, in reality, there are about five real growth strategies to consider.
1. Market Penetration
If a business is trying to grow, but there’s not a clear strategy in place, it’s likely that they’re unknowingly using a market penetration theory for success. The most common strategy, and one of the easiest to comprehend in terms of growth, market penetration’s goal is getting your product/service to sell more to customers already in your market. By increasing market share (getting your products to be bought by more people in your current market), you can dramatically grow your business. Marketing is a huge aspect of achieving market penetration, but so are other business strategies, such as becoming more competitive by lowering your prices.
2. Market Expansion
Similar to market penetration, market expansion (also referred to as market development) focuses on expanding into new markets, which means you sell more products by getting in front of new audiences. Depending on the platform you use to sell, a market expansion strategy could include new retail stores in new cities, new accounts in new stores, or targeted Facebook ads to a new region. Because market expansion requires you to work within a new demographic, there’s a lot of research that needs to be done in order to ensure that your product or service will continue to be a success. One of the main reasons a business will choose market expansion in favor of market penetration is because the market is so saturated that there is really no room to grow within it. Finding a new way to market your product, like demonstrating a new use to a new target audience, is another key aspect of market expansion for most businesses.
3. Product Development
Sometimes referred to as product expansion, product development requires businesses to create new products to add to their current product line. Depending on your specific type of product and niche, product development could entail creating a whole new line of products or be as simple as updating the features on your current product line. Especially in the world of technology, product development is almost a requirement as products become outdated rather quickly.
4. Product Diversification
While product development focuses on creating new products within the current realm of business, product diversification asks companies to reimagine their entire image, adding new products in order to attract new, more diverse customers. Because this type of growth strategy is fairly risky, it’s important for businesses interested in following a product diversification strategy to be thorough in their research. Selling new products to new markets can completely tank unless there is enough evidence that they, in fact, won’t.
5. Company Acquisition
Some companies choose to use the company acquisition model to create growth because, although it’s risky, it’s typically less so than product diversification. When acquiring another business, that business’s model has already been proven, testing the market and giving you plenty of research to analyze and use. Company acquisition allows for product line expansion, as well as for a company to enter brand new markets. Of course, buying another company does cost a significant amount of money, which means knowing the reason why you want to purchase that specific company is critical.
How to Choose the Right Business Growth Strategy for You
It’s likely that one or two of the five different strategies above jumped out at you, which is a good thing. That means you know your business and its strengths and understand which path forward is likely the best in terms of long-term success. However, before you dive in headfirst, it’s a good idea to look a little closer at why other businesses choose different strategies to make sure that your gut feeling steers you in the right direction.
As one of the least risky growth strategies, market penetration proves to be the most popular choice for businesses because there is little guesswork involved. Market penetration involves selling your current product to your current audience, which means you already have the data you need to be successful. For most businesses just looking to get started with sustainable growth, beginning with a steady market penetration strategy is the best decision.
Of course, if you’ve already exhausted your market penetration strategy, or if you simply know that your market is already oversaturated, then finding a supplemental or replacement growth strategy is the next step. Each of the remaining four strategies does carry an elevated risk, but following one really is the only way to continue growing.
Of the four remaining strategies (Expansion, Development, Diversification, Acquisition), knowing which one to choose will take some time. It all comes down to your vision for your business and how you want to see it succeed. While all of these strategies can lead to success, there’s probably only one or two that feels like a good fit for your business. And, if all of them do feel like the right fit, you can absolutely combine them all! The key is not trying to do everything at once or you’ll end up spread so thin (with so few resources) that it will be difficult for your business to withstand the pressure.
Moving Forward: Invest in Your Strategy
So, what’s the right amount of investment in your business’s growth strategies?
The best advice follows the 70/20/10 rule. This rule asks you to put 70% of your focus on your business’s main initiatives, 20% on testing adjacent initiatives, and 10% on researching and experimenting in an area that’s totally new. Once you’ve defined your initiatives for your business, you’ll be able to capitalize on the opportunities that are primed for success.
Going forward, just remember that product development should always make sense in terms of your core offering and, when it’s time to diversify, take time to optimize your core business first so that you have a strong foundation. Above all else, testing is the key to success — and one of the only ways you can ensure you don’t lose more money than necessary when trying to grow. As long as you’re listening to your customers and moving at a sensible pace, your business will be guided in the right direction.