Every year, thousands of entrepreneurs launch their startup businesses with the hope of being the next big things in the market.
But, the success rate is low and most don’t survive the first year.
Which begs the question…
Why do startups and small businesses fail? What differentiates the winners with the rest?
All business ideas have the potential for development.
It’s the ideology and not the ideas that make the difference.
Ultimately, it boils down to the business model and business growth strategies to decide the business’ fate.
Successful businesses are built on strong growth strategies and manage to create traction in the market to achieve higher growth rates.
So, what needs to be done to achieve business growth?
Let’s explore the best business growth strategies in more depth!
The Four Fundamental Principles of Business Growth Strategies
The four fundamental principles of business growth strategies are:
- Product Development
- Market Penetration
- Market Development
- Diversification
Let’s explore these in more detail!
1. Product Development
Product development is the process where innovation and creativity take an idea and translate it into a tangible product (or service).
It also includes improvising existing products as demanded by the market.
Product development is a continually evolving process.
The more variations you to try to develop, the better it gets (kind of like writing headlines).
To get to the best version possible, product development is broken up into:
- Design
- Process
Design is what makes your product unique and how it can provide value to your target market. A process is the sequence of steps involved to create the product.
2. Market Penetration Strategies
Penetrating a market with a new product requires a lot of strategy.
Market penetration refers to the extent to which a product is bought and recognized by a certain target market.
In other words, look at your target market. How many know of, use, and recognize your product?
Successfully penetrating your market can mean great business, but you shouldn’t have to do it at the expense of your profit.
Here are some commonly used market penetration strategies:
- Uniqueness
- Price
- Promotional Campaigns
- Strategic Alliances
Stick to one strategy at first and then expand into others.
3. Market Development
Once you’ve entered the market, it’s time to best use the potential and create an impact.
Market development is a business growth strategy that identifies and develops new market segments for existing products.
In other words, how you can expand the current reach of your existing products.
Market development is mainly focused on:
- Pricing
- Distribution Channels
- Branding
- Promotion
And, remember that you may need to refine your product throughout this stage to cater to other markets.
4. Diversification
After establishing a market for your product and started creating a brand, it’s time to further diversify your offerings.
Diversification involves a business enlarging its range of products or services and scope of operations.
There are two main types of diversification:
- Related
- Unrelated
Related diversification starts by expanding the current line of products and services and unrelated diversification starts by expanding into a newer, less directly related line of products and services.
Life Cycle Phases for Small Businesses and Startups
After understanding the principles of business growth strategies, you need to understand the life cycle for startups.
The three phases are:
- Inception
- Struggle for Existence and Market Penetration
- Good to Great
Let’s explore these a little more!
1. The Inception
Very little growth is experienced in the inception phase.
This is the phase where they focus on product design and launching the product.
2. Struggle for Existence and Market Penetration
This phase decides the fate of the company.
Either it begins to penetrate the market or it doesn’t gain any traction.
Those who fail to withstand the struggles in this phase will eventually exit the market.
3. From Good to Great
If a startup survives, it will start growing into a larger company.
If a company reinvests its profits or receives capital in the form of investment, it can grow and scale faster.
But, you have to utilize your cash flow strategically to succeed long-term.
Much of this is due to how you market your startup.
Stages of Growth for Small Businesses and Startups
There are six main stages of growth for small businesses and startups that you should know:
- Alpha and Beta Testing
- Construct a Business Model
- Ready to Hire and Fire Policy
- Invest in Talent
- Track Progress
- Customer Satisfaction
Let’s briefly explain each of these stages with a little more detail!
1. Alpha and Beta Testing
Alpha testing exists to begin testing the bugs and proceeds into highly skilled people testing the product before it’s introduced to the market.
Beta testing exposes the product to the market and asks them to try it out for actionable feedback and advice on how to improve it.
2. Construct a Business Model
The business model should be succinct.
You should include:
- Resources
- Partners
- Innovation Methods
- Values
- Target Market
- Financing Strategy
If you need to, draft a business plan to articulate it.
3. Ready to Hire and Fire
Startups need to be very careful with their revenue and cash flow in their initial stages. You should always be ready to hire and fire people as per the demand without any regrets.
Your policies must be guided by purpose, values, and mission.
4. Invest in Talent
To sustain as a successful business, you need to invest in talent.
By talent, I mean contractors, freelancers, and employees.
You can choose to either outsource or offshore.
5. Track Progress
As a startup or small business, you always need to keep tracking yourself. You can never know where and how you are progressing without the proper tracking in place.
It helps you update your growth strategies and work consistently.
6. Customer Satisfaction
As Sam Walton quoted…
“There is only one boss the customer, and he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else”.
Every business must work on the model to serve its loyal customers. In successful business models or revenue models, profits will come only after customer satisfaction.
Conclusion
In this article, we discussed:
- Fundamental principles of business growth strategies
- Life cycle phases of small businesses and startups
- Stages of growth for small businesses and startups
If you follow well-established business growth strategies and customize them with a pinch of innovation, you can succeed.
The most important thing is to not give up.
Growing a business is hard, so you have to stick in it for the long-term for your business to flourish.
