Have you created a robust strategy for your business growth or are you drifting towards one approach by maximising opportunities as they arise?
In the most simplistic way, business growth is achieved by:
(1) increasing your revenue with greater product sales or service income from new or existing products or services (your topline), or,
(2) increasing the profitability of your business by reducing costs (your bottom line).
It is important to develop a strategy for business growth and do this alongside ensuring you remain in a position to maximise existing opportunities. One of the most important things to do is undertake market research and competitor analysis to provide insight into underserved areas which your business can meet.
Growth via your existing market in new territories
Who are your competitors and where do they operate? Are they working in countries or new sectors which you have the opportunity to exploit too? Are there markets that you have yet to explore with your product and services?
A related consideration is ensuring that you remain aware of any changes to the environment in which you selling your products or services. What are competitors introducing that might displace what you have?
New customer needs and challenges.
Are your customers needs changing and are you responding to these with enhancements or new products? If you want to respond to these by introducing a new product or service, this is likely to carry expense in financial terms and risk. You will need to seek out a deep understanding of the new challenge you are aiming to solve. Significant capital investment is usually required.
Exploiting opportunities in new sectors with existing products and services
Diversification into new sectors has always been attractive for businesses who have technologies and services that can be transferred into other areas. This can be cost-effective if no further product development is required, but any changes required to make it fit for purpose in the new sector needs to be carefully considered so business growth is not stifled. If you are entering a new market with a product you have to modify in some way, this can often be the riskiest option as you are having to work with two unknowns, a new market and modified product. However, if you are the first mover in this space, this could be a huge advantage.
Some businesses will deploy one or more of these growth strategies by increasing capacity and capability in house, through collaboration or by acquisition.
When deciding which growth strategy to take for your business at any one time must be underpinned by solid market research and associated data. The very fact you are growing your business as opposed to starting it for the first time means you have some degree of success to build on. Risk should be weighed up in this context. You have more to lose than you once had but without adequate and consistent growth your business may not survive for the long term.
The degree of risk you take when determining whether to enter new markets or develop new products will be determined by factors such as:
(1) the skillset you have available to you in your team or potential collaborators and/or the
(2) existing revenue and available finance including access to new finance through investment or grants
You may choose to grow your business organically or at pace, either way, you must plan, decide your approach and focus. There are no shortcuts.