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Growth Strategies for Your Business

Wealth Magazine

Transforming a small company into a multinational can never be easy. The road to success is littered with failures. Business research displays that only a tenth of all companies starting along that path reach the $250 million annual revenue milestone. A very few (about 0.036 percent) reach $1 billion in yearly sales.

But if you truly have stars in your eyes and the hunger of achievement in your belly (as they say), then you will realize that staying small is not good enough, not for you and not for the survival of your business. Do not fret: there are many companies out there who have successfully transitioned from being a start-up or small business to an extremely profitable, huge commercial concern.

Develop a growth strategy: the most intensive the better

You need a growth strategy to go from milestone A to milestone B on your achievements’ highway. The ideal strategy is one that harvests the maximum results from minimum risk. Growth strategies somewhat resemble a ladder, where the lower rungs represent less risk and less impact on faster growth. Small businesses should concentrate on strategies which typify the lower rungs of the abstract ladder and then climb up when they have the confidence to do so. When you develop your company’s growth strategy, first take a sharp look at the bottom rungs; this approach is popularly known as an Intensive Growth Strategy. As you climb each rung, new opportunities for faster growth manifest as trade-offs for greater risks.

Penetrate the market: The strategy for growth with a minimal quotient of risk for any commercial entity is to sell more of its present product or service to its existing clients. This strategy is honed into perfection by huge consumer companies. For a smoother business performance (read easier profits), find new and novel ways by which the customer can use your product or service. For example, baking soda can be used as a deodorizer for the refrigerator.

Develop the market: Congratulations! You have negotiated the first few rungs of the business ladder. Now it is time to go up a few higher rungs. To do this, find a way to sell your product or service to clients based in another country, state, or city. Many companies adopt this strategy by peppering the country with franchises. QSR (Quick Service Restaurant) companies do this all the time (Subway sandwiches are omnipresent). Locational presence is racked up before you can say “alternative channels”.

Alternative channels: This strategy calls for your company to literally be at the fingertips of your clients where ever they go. This can be achieved by selling the products online. You can be one with the world by enabling your customers to access your services or products in newer ways like, through an app which sits in the corner of the smartphone mobile screen.

Develop new products: A strategy as old as sin itself! It means creating new products to sell to your existing clients as well as to attract new ones. If you enjoy the luxury of choice, then ideally you can sell new products to long-time customers. This is because appealing to a completely new audience will require more time and effort to be invested in understanding tastes and preferences.

New customers mean new products: Many a time the market itself will compel you to create a new product for a newer type of customer. For example, Sony invented the Walkman and opened a floodgate of profits. The Walkman also showcased the Japanese company’s skill for mastering technology and paved the way for its dominance in electronics in the subsequent years.

If you elect to pursue an Intensive Growth Strategy, then you must take only one step of the ladder at any given time. Remember that with each rung or step comes risk, effort, and uncertainty. Sometimes the market conditions urge you to innovate and take more risk.

Integrative Growth Strategies

You have exhausted all the footwork in the course of the Intensive Growth Strategy path with no effect; it is now time to foster growth via Integrative Growth Strategies or by acquisition. Here is a dampener: almost 75 percent of acquisitions could not deliver the efficiencies or values which were predicted. In a few cases, it may come to a flaming end, like the deal between Time Warner and AOL. However, there are three excellent alternatives when there is time to implement an Integrative Growth Strategy:

Horizontal: This strategy involves buying your competitor business or businesses. If you employ the horizontal strategy, your company’s growth will be much smoother. Not only do you get more resources, there is also less competition.

Backward: You could take control of your key supplier for better control of the supply chain. Doing this will assist you to create new products much more swiftly and economically.

Forward: You can also concentrate on purchasing the component companies which are an integral part of the distribution chain. For example, many garment companies buy retail stores to push their products without competition following their heels. You could also diversify for more growth.

It is not enough to simply scale up in terms of size, but it is also important that you become an industry leader. It is wise to make bold moves when other businesses are following the established line. There is no sense in avoiding problems when they come up. Remember that the first person to solve a problem also makes the most money.

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