There is nothing more disheartening to an entrepreneur than business stagnation. This is where you’ve hit the point of having a regular income but there is little or no growth in profits. So how can you grow your business and start generating more revenue?
You need to develop a business growth strategy.
This is the strategy that specifies what you want to achieve and how you will achieve it.
Set your business strategic goals
The first step in defining your business growth strategy is to set goals and growth targets. For instance if your business has a current turnover of R150,00 per month, what is your future target in 6 months and in 12 months? You should set goals for your turnover and net profit. For businesses that supply multiple products or services you can break these goals down to product or service level.
You also need to revisit your original business strategic vision statement and goals. Check what your original intention was for your business. Are your original goals still relevant or do you want to make strategic changes in order to achieve your business vision? Write down those goals in your growth strategy that will help you achieve your strategic vision.
The Business Growth Strategy Matrix
Once you have defined what you want to achieve, you need to define how you will achieve your growth goals. This is where the business growth strategy matrix can help you.
Business Growth Strategy Matrix
The business growth matrix will help you determine how to grow your business by examining four possible growth opportunities:
This is where you explore ways to increase your market share within your existing market segment and with you existing products or services. For instance you can look at ways to increase your revenue by offering promotions, lowering prices or by providing incentives to attract new and repeat customers.
Cross-selling can also be an option. This is where you offer a complementary product or service to go with the one your customer is purchasing. For instance a coffee shop will offer a discounted pastry when you buy your latte. These sort of deals not only increase your revenue but can also attract new customers if they see you are offering a better deal than your competitors.
This is offering new products or services to your customers to drive up your revenues. For instance you could offer a new brand of tea at your coffee shop, or you could offer new training workshops if you are a business consultant.
You can also look at opportunities for up-selling. This is where you can build or include new add-on features to your existing products to create a higher-end version of your product. Think about those mobile phone deals which offer you the basic call rates, then offer you add-ons like extra data or airtime for just a little bit more.
Market development is about looking for opportunities outside of your current market segment. This could mean looking at a new geographical location, offering online purchasing options or targeting a different type of customer all together. Here you don’t need to look at further product development as you are only promoting your existing product or service range, however you will need to do thorough market research to see if your new target market is a viable one.
This is about stepping completely out of your comfort zone and developing a new product to appeal to a new market segment. For instance a bookshop could open up a coffee shop linked to their business. Think about how some supermarkets no longer offer just groceries. They also offer life insurance and other financial services options.
The deciding factor
After brainstorming possible growth options, you need to analyse each one to see which is the best option for you. For cash-strapped businesses cross-selling and up-selling might be the best options, while for entrepreneurs who are keen to take a risk, might consider diversification.
The point is you need to consider the right option is for you given the type of business you run, your financial situation and what your strategic goals are. Whatever you chose make sure that it aligns with your overall business vision so that you can keep focussed on your long-term objectives.