Starting out a new business can be exciting, but it can be hard expanding if you don’t have a tangible, long-term growth plan in place. Here are 5 of our strategies to help grow your SME.
Product development involves creating a new product for an existing market. For example, if you experience a drop in sales or profits, or notice changes in behaviour in your target audience it could suggest that products are becoming outdated or uninteresting. Therefore, this may be a good opportunity to launch something new. It is particularly worth pursuing if your business has a close following, as you can leverage your customers’ loyalty when innovating new products.
This is exactly what Coca Cola did in 1995 with their release of Cherry Coke, which saw their market share increase significantly. This came at a time when competitors were releasing unofficial cherry coke adding cherry syrup to coke, and so Coca Cola took the opportunity to release it officially as the first flavoured Coke, which attracted the attention of new customers and brought back the interest of previous and existing customers.
You can also consider phasing out older products or products that do not generate as many sales and replacing them with newer variants. For example, it is not uncommon for companies to create an upgraded version of their product when interest begins to die down.
It may be worth considering branching out to similar markets or targeting specific niche markets if you are finding your current market oversaturated or are finding it difficult to attract customers. When you identify the right market and audience, your business will be able to sustain itself financially and compete effectively against other more established or larger businesses.
Marketing your product elsewhere can be difficult, so it’s important to conduct extensive market research in advance. Know your audience well — it’s not enough to say that your new audience is female adults; conduct testing so you can identify a specific audience and market directly to them.
While this can seem daunting financially for a small business in comparison to a large corporation, it’s definitely possible to branch out into similar markets if you conduct thorough research and think innovatively. For example, if you own a small restaurant, you can consider marketing your services to the private catering industry, or use business-to-business marketing to try and sell some products in a grocery store or local coffee shop. Likewise, if you own a recruitment agency, for example, you can also consider developing a software to help business owners track their employees’ wages.
A more straightforward way to increase your sales and market share is to sell more of your products by convincing your customers to choose you over your competitors. According to the Commercial Director of WebRadar, Marcelo Schiaffino, “a good strategy for an SME is to excel in one industry vertical”. Since you already have a grasp on your market and audience, you can do this by simply having an effective marketing strategy. For example, you can offer discounts on your products or make bundles where you market your goods with complementary goods or free gifts. You can also consider lowering your prices so that customers choose you over your competitors; however, this is only a short-term strategy and you should not rely on this.
You can also take advantage of lean-agile methodologies to help with your market penetration strategy. Agile techniques focus on the use of technology, customer interaction and collaboration to enhance software development, while lean techniques address difficulties in product development by “reducing long development cycles and high development and production costs”. In drawing from these techniques, your business can benefit from higher operational efficiency and deliver better results. For example, if you are working in recruiting, you can employ agile recruiting techniques, such as using a Kanban board to prioritise roles, to create more flexibility and efficiency for your recruiting.
Alternative channels involve using different types of platforms to market your business. If your business is brick and mortar and you don’t have an online presence, consider taking advantage of technology and establishing an online presence for your business. Research has shown that nearly a quarter of small businesses do not have their own website, but since most customers expect to be able to find information about your business online, it will be beneficial in the long run to set up a website or Facebook page about your business.
You can also take advantage of different advertising channels to market your business: for example, you can use Google ads and Facebook marketing, which not only expands your reach both online and offline, but can also allow you target groups of people very specifically. You can also consider using email marketing by compiling a list of people’s emails and sending them promotional emails. For example, if you have a recruiting agency, consider creating a monthly newsletter with information on the recruiting industry or companies that are hiring, and then use the emails you collect to send out future promotional emails.
This is when you create a new product for a new market, and it carries significantly more risk than the previous growth strategies. However, if successful, your business will be able to better endure changes or volatility in a market, as you are not financially dependent on one market.
A good example of diversification is 3D manufacturing company EnvisionTEC, which started out manufacturing in jewellery, and later expanded in other industries like healthcare and oil and gas. While this is less plausible for SMEs, you can still establish yourself in your market and build a robust foundation before expanding into other different sectors and regions.
In this article, we’ve rounded up some of the growth strategies you can pursue for your small business. These include product development, market development, market penetration, alternative channels and diversification.
Product development involves creating a new product for an existing market, while market development involves marketing an existing product to a new market, both of which have different benefits. You can also consider market penetration, which consists of increasing your sales and current market share by better marketing your product. Alternatively, you can diversify by creating a new product for a new market, or simply consider using alternative channels to increase sales for your product.