If you’re a small business owner, one of the fundamental goals you’d probably set is achieving sustainable, consistent growth. After all, expansion can open new opportunities and experiences for your employees and your entire operations. However, not all entrepreneurs with big visions succeed, and only 25% survive beyond 15 years, according to Bureau of Labor Statistics figures. So, through the process, you must develop a small business growth strategy that lets you work around the challenges that may hinder you from securing long-term success.
Navigating the Small Business Terrain
While small businesses in the U.S. have plenty of growth opportunities, they are navigating a highly competitive environment. In fact, statistics show that 20% of these new ventures fail within the first two years of operation. So, here are some ways you can navigate the most common hurdles you may encounter as a small business owner:
Pinpointing the Ideal Customer Base
According to a 2021 CB Insights report, one of the top reasons why small businesses fail is the lack of market demand. This information proves the importance of conducting market research long before you start any venture. Besides, if you want to build a strong small business growth strategy, you must perform a deep dive into the ideal customers who will benefit the most from your services or products. Understand which behaviors, demographics, and preferences you can serve best.
Understanding the Local Competition
According to the U.S. Small Business Administration, you can make your business unique and gain an advantage by conducting competitive analysis. Moreover, one effective small business strategy is knowing the best decisions to make for your company. You can achieve this by understanding what businesses within your field are doing. For example, you can use the Department of Justice’s diagram of Porter’s Five Forces to understand the threat of new services or competitors, as well as how consumers and suppliers affect market prices.
Staying Attuned to Market Trends
When you’re planning to scale your small business, you must stay relevant and keep abreast of the market trends. Moreover, you need to continue being agile to effectively adapt to new technology and consumer demands. For example, a GE Capital Retail Bank study found that 81% of shoppers conduct online research on a business before visiting its physical store. Knowing this market trend lets you understand consumer behavior, allowing you to adjust your growth strategy toward improving your online presence.
Crafting Business Objectives for a Small Business Growth Strategy
According to a study published in the Journal of Management Studies, planning can help businesses grow 30% faster. However, the quality of your plan matters, and it’s crucial to set precise and attainable goals to drive growth for your small business. There are many ways to achieve this, but one of the most effective methods is to apply SMART (Specific, Measurable, Achievable, Relevant, Time-Bound) goals to your growth strategy. Here are some tips you can follow:
- Set specific goals to give your scaling plans a clear direction.
- The goals should have measurable targets so you can track your progress.
- Establish achievable objectives to ensure that your strategy will be realistic within your resources and capabilities.
- Review the relevance of your goals against your overall business vision.
- Set deadlines to enable timely assessments and to create a sense of urgency.
Even with limited resources, you can still achieve impactful growth when you take this approach. What’s more, carefully crafting goals for your small business strategy allows you to create a structured and adaptable roadmap to success.
Growth Engines that Work Well for Small Businesses
Enterprises have more resources for generating and retaining customers. Most of the time, small businesses can’t compete with this. Despite that, there are still strategies that are specifically designed to drive growth for small businesses. Here are some time-honored techniques you can try:
Broadening Income Sources
One of the growth strategies you can try for your business is diversification. This approach involves identifying new services or products to sell to a new market. While this often requires investing a significant amount upfront, it can still generate high returns when done correctly. Here are different types of diversification:
- Horizontal: This strategy involves expanding your product offerings within the same market, targeting your existing customer base with new product lines.
- Vertical: You can begin operating in areas typically occupied by your suppliers or customers, effectively competing with them.
- Concentric: Develop new products or services that are closely related to or complement your current offerings.
- Conglomerate: Introduce new products or services aimed at a completely different customer segment from your current market.
According to a study commissioned by the U.S. Chamber of Commerce, 87% of small businesses reported increased efficiency when they incorporated technology platforms in their operations. Indeed, leveraging technology is more than a trend—it can be a critical strategy for your growth. Here are some tech solutions that can drive sales, profit, and employee productivity:
- Team Communication Software: Tools like Slack and Microsoft Teams facilitate seamless communication, which is vital for both remote and in-house teams.
- Project Management Software: Platforms for managing and tracking project tasks ensure streamlined processes and on-track deliverables.
- Customer Relationship Management (CRM) Software: Essential for tracking customer interactions, CRM systems aid in improving customer retention and conversion.
- Accounting Software: Solutions like QuickBooks and Xero offer tailored financial management, aiding in cash flow tracking and financial reporting.
- Human Resources Management (HRM) Software: HRM programs streamline admin tasks like recruitment, payroll, and performance management.
- Business Intelligence (BI) Software: BI tools are used for analyzing data, identifying trends, and making informed business decisions.
Forging Strategic Alliances
One of the ways you can expand your reach is by partnering with another small business. This approach can let you access another brand’s audience. But be careful when choosing the business to partner with. For example, you shouldn’t collaborate with a company that directly competes with your products or services. Doing so brings the risk of losing your customers to your competitors. Ideally, you should choose a business that complements what you can offer. At the same time, ensure that the brand’s customer base will be interested in your service or product.
When forging a strategic alliance with another startup, make sure that both parties can benefit from the venture. Let’s say you’re specializing in software development. In this case, you can partner with a hardware manufacturer and collaborate on creating a new smart device. What if you own a coffee shop? You can partner with a local bookstore to host a book-reading and coffee-tasting event. These are some of the examples that allow you to widen your reach and expand your resources.
Financial Strategy Tailored for Small Businesses
According to a survey published in the Journal of Entrepreneurial Finance, many small business owners use their personal savings for their start-up financing. While this is not necessarily a disadvantageous move, it is not as effective in growing an existing company. Once you start scaling, you need to allocate your resources efficiently, which is why it’s crucial to explore diverse funding avenues.
Here are some types of funding avenues tailored for small businesses:
- Government Grants: These are often sector-specific and don't require repayment, making them ideal for startups or businesses focusing on research and innovation. They're highly competitive but can provide significant financial support without equity loss.
- Venture Capital: Suitable for high-growth potential businesses, venture capital involves equity in exchange for funding. It's ideal for businesses looking to scale quickly. What’s more, they offer valuable mentorship and network access.
- Angel Investors: These are individuals who offer capital in exchange for equity or convertible debt. Besides, angel investors are often entrepreneurs themselves, providing not just funding but also advice and industry connections.
- Small Business Loans: These are traditional forms of funding provided by banks or financial institutions. They're suitable for businesses with a solid plan and the ability to make regular repayments. Note that interest rates and terms vary significantly based on creditworthiness and the business model.
Tailored Marketing and Branding Tactics for Small Businesses
According to Brightlocal’s 2023 Local Consumer Review Survey, about 32% of buyers research businesses online at least once a week. So, if you want to be the first name they find, you should make marketing and branding part of your small business growth strategy. Here are some ways you can achieve that:
Establishing a Distinctive Brand Identity
One of the ways you can capture local market attention and attract loyal customers is by developing a memorable brand for your small business. However, that approach goes beyond creating a slogan or a logo—you must create an identity that resonates deeply with your target audience. As such, you need to understand what your customers value and incorporate that information into every aspect of your brand. Whether it’s through maintaining a consistent tone, releasing unique packaging, or providing excellent customer service, a solid brand identity can differentiate your business in a crowded market.
Embracing Focused Digital Marketing Approaches
According to Statista figures, there are about 4.57 billion active internet users across the globe. Indeed, investing in online marketing can be a powerful growth strategy for your small business. Here are some ways you can leverage this tool:
- Business Website: You can keep your business accessible 24/7 through a website. Moreover, having a website boosts your brand credibility.
- Social Media: There are plenty of social media platforms, but growing your business doesn’t mean you have to be active on all of these sites. For example, you can hire a dedicated social media assistant to help you identify the platforms where you can find most of your target audience.
- Review Sites: When you’re active on review sites, people can find you easily. What’s more, when they see your responses to comments, they will know that you value customer service.
Prioritizing Customer Retention
Customer retention should also be part of your growth strategy for your small business. This involves nurturing your existing and new customers. Moreover, it includes converting them into repeat and loyal clients.
Besides, increasing your customer retention rates by 5% can increase your profits by 25% to 95%, according to Bain & Company research. What’s more, returning clients are more likely to spend more on your brand and even recommend you to other people. Here are some ways to build trust and retain customers:
- Create personalized emails and be active on social media to ensure regular communication with your customers.
- Go beyond what you promise. For instance, if you promise to complete deliveries in 48 hours, accomplish them within 24 hours.
- Show customer appreciation by providing free gifts, loyalty discounts, and complimentary upgrades.
- Gather customer feedback through user reviews, questionnaires, and surveys.
- Offer referral bonuses to reward loyal brand ambassadors and advocates.
- Offer phone, self-service, and live chat support to ensure a great customer experience.
Cultivating a Dynamic Team for Small Businesses
It’s common for small businesses to depend on the same person who envisioned the idea and launched the company. However, as you scale your operations, you must learn how to delegate. Consider hiring a dedicated team to handle admin tasks related to recruitment, finances, and marketing. Find hard-working, curious, and diligent employees who will share the same passion you have for your services or products.
Of course, once you have the right team in place, keep them motivated. You can achieve this through various efforts, including creating a healthy work environment, offering professional development opportunities, and giving rewards for hard work. You can also keep your team motivated and engaged by providing open communication and regular feedback. When you invest in their growth and well-being, you’re also creating a dynamic workforce that drives your company’s success.
Focus on Your Small Business Growth Strategy
As an ambitious small business owner, remember that growth is a deliberate and thoughtful process. It's about understanding your market, effectively allocating resources, and building a team that shares your vision. By integrating innovation and excellent customer service in your strategy, you’re placing your business on the path to success.