4 SureFire Strategies to Grow Your Small Business
Running a Small Business is anything but easy. As a Small Business Owner the majority of your time is spent just trying to keep the lights on and fighting the next fire.
But there comes a time when every owner needs to decide whether or not they will and can grow their Small Business. But exactly how to grow your small business is challenging.
Inevitably, you arrive at that crossroads where you choose whether to remain status quo or swing for the fences. But exactly how to grow your small business is challenging. Say you decide to swing, what are the best ways to grow your small business?
Well, there are a few core ways as to how to grow your Small Business. These are by no means the only ways to grow, but they are the more common ways. Let’s unpack each.
Organic growth is perhaps the most logical and more common strategy that a business can employ to grow. Growing organically involves assessing your business from an internal point of view. In other words, what is within my control as an owner. This review could lead to strategies that include managing expenses, increasing prices or gaining additional efficiencies.
Managing expenses could come in the form of cutting cost. A few ways to do this are to renegotiate contracts with suppliers or vendors, reduce unneeded expenditures or just generally to stretch each dollar further and doing more with less.
Cutting fixed costs is a great way to manage expenses. Every penny saved in fixed costs will likely fall straight to the bottom-line and improve the profitability of the business. This increased profitability can be used as investment dollars to grow the firm. Fixed costs are those costs that remain the same regardless of seasonality or increases in production etc. like rent.
To deploy an expense management strategy, review your financial ratios like your Current Ratio as well as your Net Profit Margin to get an idea of where your company may have room for improvement. The Income Statement, Expense Statement, and Cash Flow Statement within Bookvalu can help you gain visibility into where your cash spent is going.
Increasing prices is a good growth strategy but Beware of competing on price alone. To price well, you need to understand the value of your product/service. What is the market willing to pay for it? What differentiates the offering that I can charge more for it than my competitors? Can I improve my offering to increase the price?
Knowing the answers to these questions will help you understand the value of market offering and allow you to price according. This known as value-based pricing. Value-based pricing goes beyond a dollar value on a product or service and incorporates the overall value of the offering.
Gaining efficiencies are a bit more nuanced and very dependent on the type and specific circumstances related to the company. A few examples could include reducing waste in a production environment, re-arranging a manufacturing floor for increased production capacity or even reorganizing departments for improved communication.
Waste reduction and re-arranging of equipment are strategies that focus on gaining efficiencies within the existing structure of your business. These strategies involve careful planning and can take time to implement.
Developing new products/services in a market with high demand can be another way to achieve substantial business growth. This growth strategy is one of the more complex and could involve a significant investment on the part of the organization. Developing new products can pay handsomely in the future.
This strategy involves knowing your company and the Industry exceptionally well. Why? By understanding the Industry, you can leverage trends and potential unmet needs in the market. By knowing your business inside and out, you will be able to determine whether you have the capacity, resources, and expertise to execute on this strategy.
Just think of Apple with the iPhone, or Facebook with their incredibly powerful advertising platform. While either is a Small Business, the example is valid. Many times new products/services can be a logical offshoot of your existing offerings but may end up filling a greater market need and resulting in exponential growth.
New markets are ready for new market entrants. Often these new territories or opportunities are right in front of us without us even knowing it. As with launching new products/services, this growth strategy involves in-depth due diligence to ensure that when the risk to enter a new market is taken it’s a calculated one.
Think of new markets as a national expansion if you are a local business, or international deployment if you are already national. New markets could also include new sales territories or even setting up a new headquarters.
This strategy involves the investment of time and resources to ensure that any move into a new market will be sustainable.
Mergers and Acquisitions
Mergers and acquisitions are a relatively underutilized strategy to grow your Small Business. Obviously, acquisitions can be the most expensive and complicated way to grow a business. Acquisitions, however, may be a viable strategy for those organizations in high growth and high demand markets that are looking to gain market share by acquiring a competitor.
Acquisitions can provide a springboard to new products/services as well as new markets. It goes without saying that this is not a strategy for all businesses. Acquisitions should be approached with caution and with the correct team, expertise, and resources in place.
So why are mergers and acquisitions an underutilized strategy? Well, they typically involve extensive and expensive expertise such as Bankers and Lawyers. With access to resources, a potential target, and the courage to close the transaction, this may be a possible growth strategy for more Small Business.
We hope that tools like Bookvalu facilitate more Small Business mergers and acquisitions and we plan on being one of the catalysts to make it happen.
Grow Your Small Business Takeaways
- These Small Business growth strategies, when deployed individually or in combination, are the most common and fruitful ways to grow a business.
- Each business is unique, and not all of these strategies will work for all companies. It is up to you, the owner, to decide which will work best and provide the most long-term sustainable value for your organization.
- The way you choose to grow your Small Business will be different than what other owner chooses
Bookvalu is QuickBooks Forecasting, Ratio Analysis, and Valuation software that provides financial visibility and insight for your Small Business.