How to Plan an Effective Small Business Growth Strategy

Running a small business can be an
all-consuming task. But just because you have a to-do list that’s longer than War and Peace, it doesn’t mean you can
afford to skip the important step of creating a growth strategy.

If you think you don’t have time to create
a small business growth strategy, consider this: A few hours of strategic
planning now could save you hundreds of hours of wasted time in the months and
years to come. 

It could get you focused on the right things, and it could help your business to grow much more
quickly and generate more profits, so that you can hire people to help you with
that to-do list instead of slowly drowning under it by yourself.

In this tutorial, you’ll learn exactly what
a small business growth strategy is, why it’s important to have one, and how
you can go about creating one. You’ll learn about some of the different paths
to growth and how you can decide which one is right for your business.

1. What Is a Small Business Growth Strategy?

First of all, let’s get clear about what
we’re talking about here. A small business growth strategy is simply a plan
that outlines how your company can get from where it is today to where you want
it to be.

Does that sound like a regular business
plan? There are certainly some similarities. But, as I wrote in my tutorial
on business plans, there are lots of different components to a business plan,
such as financial plans, organizational structures, competitive analysis, and
more. 

A business plan tends to have a broader focus, and often it’s intended at least partly
for an external audience such as a bank or investor, so you need to spend time
describing your company and what it does.

Your growth strategy, on the other hand, is
just for you, and it’s entirely focused on how you plan to grow:  

• Where will you
  get new customers from? 


• How will you expand into new markets? 


• What new products
  could you offer? 

That kind of thing. Think of it as the big-picture strategic thinking that will inform much of the content of your business plan.

2. Understand the Different Paths to Growth

So how can your company grow? There are
several different approaches you could take, and we’ll look at some of the main
paths to small business growth in this section. Here are six growth paths you can plan for: 

1. More Customers

This is pretty simple, and it’s probably
what you’re already doing right now. It just involves staying in your existing
market, with your existing product range, and finding more customers for those
products. 

If you choose this path, you’ll probably focus intensely on marketing
and advertising, as well as thinking about different pricing or promotional
strategies you could use to reach more people.

The good thing about being a small business
is that you’ve probably got plenty of room to grow with just this simple
strategy. Unless you’re in a tiny niche, there are probably lots more potential
customers out there for you to reach. 

Market saturation—the point at which it
becomes tough to find new customers—is unlikely to be an issue for quite a
while.

2. More Money From Existing Customers

Although finding new customers is a simple
concept, it can be hard to do in practice. So it’s also worth exploring how you
can make more money from your existing customers.

After all, these are people who have
already bought from you. You know that they’re interested, you have their
contact details, and you already have (hopefully) positive brand recognition.
It should be much easier to make a sale.

If you want to explore this path to growth,
you’ll need to brainstorm about what you can offer your existing clients that
they don’t already have. Are there follow-up services you can offer, or add-on
products that go well with what they already have? Is there a way for you to
convert them from one-time customers to regular customers, for example through
a subscription-based service?

Whereas the first path was about increasing
market share, you may sometimes hear this one referred to as increasing wallet
share.

3. Offer New Products

Another way to grow is simply to offer more
stuff. I’m calling what you offer “products”, but this doesn’t necessarily mean physical
products—they could also be services or digital products.

For example, Envato, the company that runs
Tuts+, started out back in 2006 with one product: a marketplace for selling
Flash assets. It grew by offering more things, like WordPress themes, unlimited graphic templates subscription, the tutorials and courses you’ll
find on this site, and much more.

This path to growth can help you with the
others we’ve discussed too—if you’re offering more things, it’s easier to find
more customers and make more from existing ones. If you choose this path, then
invest time in product development, discovering what your customers want, and seeking out new trends in your industry.

4. Enter New Markets

If you’re currently operating only in your
own country, you can grow quickly by expanding internationally—assuming your
products are appropriate for shipping overseas. Or even if your products are
already available internationally, you can make more effort to reach new
markets by translating your content into new languages and investing in true
internationalization of your website.

Entering new markets could also mean
something closer to home, such as opening up a new store in a nearby town. It
all depends on your business and what you offer.

5. Open New Distribution Channels

This one is about expanding the ways in
which you reach people. If your business is currently a bricks-and-mortar
company, opening an eCommerce website is a new sales channel. Or perhaps you
could explore having your products sold in retail stores, or on other company’s
websites, or by affiliates. There are lots of possibilities here.

6. Buy Other Businesses

If you have the funds available, this
option can be the rocket fuel for your growth strategy. When done right, an
acquisition of another business can advance you along some of the other paths
to growth in a fraction of the time.

For example, offering new products could involve
a long process of product development, testing, refining, marketing, and more.
And after all that, the new offering may still not take off. But if you buy a company
that already offers different products, you get ready-made access to a proven
product range. You also get new customers, and possibly access to new markets
or distribution channels.

3. Where Are You Coming From?

So which path or paths do you choose? To
start making that decision, you need to get a clear picture of where you are right
now.

Set aside some time, either by yourself or
with key members of your management team, and define the current state of
affairs. Ask questions such as:

• What are your company's strengths and
  weaknesses?


• What's the competitive landscape like?


• What are some of the risks you face in your
  industry, or threats to your business model?  What are the main opportunities?


• How much funding do you have available?

You can find much more information on this
in the following tutorials:

• 
  Small Business
  
  
  How to Overcome Big Problems When Running a Small Business
  
  
  Julia Melymbrose


• 
  Management
  
  
  What If? Tools for Analyzing Possible Management Outcomes
  
  
  Lisa Jo Rudy

4. Where Are You Going?

Next, you need to get a big-picture idea of
where you want to go. Here are some questions that can get you started:

• What's important to you? What are your
  business’s values?


• Do you have a passion for doing one
  particular thing well, or do you want a more diverse business?


• Do you want to grow as quickly as possible,
  or do you want to focus on slow but sustainable growth?

Here are some helpful related tutorials to read:

• 
  Small Business
  
  
  How to Manage the 5 Stages of Small Business Growth Successfully
  
  
  Andrew Blackman


• 
  Branding
  
  
  How to Define Your Core Brand Values (And Why You Should)
  
  
  Julia Melymbrose


• 
  Small Business
  
  
  How to Become a Successful Small Business Owner
  
  
  Andrew Blackman

5. Pick a Path (Or Paths)

Return to the different paths from section 2
with this new information about your business in mind, and choose which path or
paths you want to take.

For example, if you are worried about your
existing business model coming under threat from technological changes, you
could plan to develop new products. This path worked for Envato—the original Flash marketplace closed down
in 2015 as web designers moved away from using Flash, but the other
marketplaces thrived and the business kept growing.

If, on the other hand, your business does
one thing well and you can see it continuing to do that for many years in the
future, then perhaps staying focused on that one product and maximizing the
number of customers you reach is the best path.

Deciding whether to pursue the acquisition
path will depend largely on whether you have the funds available or can find
ways to raise
debt or equity capital. But it also may depend on your business’s values
and the destination you outlined in the last step. Acquisitions can sometimes
change the culture of your business, depending on the business you acquire and
how you integrate it, so you may prefer to pursue an organic path to growth.

As you look at your options, keep in mind
that the paths to growth are not mutually exclusive, and it’s perfectly fine to
pursue several of them at once. For example, you could plan to develop new
products while also looking at ways to make more money from existing ones. You
could enter new markets and also explore new distribution channels. 

Learn more small business growth strategies: 

• 
  Small Business
  
  
  How to Maximize Your Business Profit: 7 Quick Tips
  
  
  Celine Roque

6. Plan It Out

Now that you’ve picked a general growth
path to follow, it’s time to make a more detailed plan.

Make an overall goal, and then break it
down into specific action items and objectives with clear deadlines.

For example, if you’ve decided that
offering more products is your path to growth, decide what those products will
be (or at least what ideas are worth exploring further).

Then, pick your first new product. Consider: 

• How long
  will it take you to develop it? 


• What about market research and testing? 


• How soon
  can you launch? 


• What is your marketing plan? 

Put clear deadlines on all of these activities, being realistic about how much you can do on top of all your other work.

And then break each item down into even
smaller steps, again with clear objectives and deadlines. It’s easy for
long-term strategic plans to get lost in the shuffle of more urgent (but less
valuable) day-to-day activities, so the idea is to keep you focused on the
activities that will deliver the long-term growth you want.

Try to plan some quick actions you can take
for immediate gains (such as a simple addition to an existing product that you
can offer without much additional work), as well as longer-term goals (such as
developing an entirely new product from scratch).

For more on this, try some of our goal-setting
tutorials, such as these ones:

• 
  Goal Setting
  
  
  How to Set Goals With No Room For Excuses
  
  
  David Masters


• 
  Freelance
  
  
  How to Set Effective Goals for Your Freelance Business
  
  
  Andrew Blackman

Conclusion

In this tutorial, you’ve learned about the
importance of a small business growth strategy. You’ve seen some of the main
paths to growth that a small business can take, and you’ve learned how to
evaluate them and choose the right one for your company. Then you've seen how
to put it all together and make more detailed plans.

One last thing to remember is that you
should plan to always keep planning. Strategic plans need to change with changing
circumstances, so you’ll need to take the time to return to the plan in the future—at least once a year, and possibly more often for fast-moving
businesses.

You probably won’t need to spend as much
time on these periodic updates as you do on the initial plan, because so much
of it is already in place and you won’t be starting from scratch. But it's
important to keep returning to it and making adjustments to ensure that
it’s still relevant and meets your current needs.

This process also keeps growth at the
forefront of your mind and can get you back on track if you’ve relapsed into
spending all your time on day-to-day problem-solving.