4 elements to incorporate into your business expansion strategy
It’s far too easy for startups and other young companies to be consumed by the constant struggle to keep up with a rapidly growing industry and the global economy. Fortunately, there are ways to create stability while developing a strategy that will facilitate growth and relevance within your market.
By developing a 12-month business expansion strategy, a company will be able to exercise more control. They will actively be able to determine the direction they want to go, instead of moving capriciously through the growth process and hoping for the best.
Here are four ways to do so.
1. Establish a value proposition. According to the Small Business Administration, only 50 percent of startups will survive past the five-year mark, and only 33 percent will make it to the 10-year mark. The two most prevalent contributing factors to the high rate of failure are inadequate market research and failure to develop a growth strategy for the short and long-term.
A growth strategy is significantly more than just envisioning the long-term success of the company. It is creating a tangible and actionable plan that will dictate actions and decisions moving forward. For instance, a virtual support desk decided their strategy would be centered on positioning within their market. They built their branding and marketing campaigns on presenting themselves as leaders in their market, offering valuable advice and services to help their clients meet their customer service needs.
In establishing a value position, a business creates a clearly defined idea of why customers come to them for their product or services — determining what makes them relevant to their target audience.
2. Using acquisition as a growth mechanism. Acquisition as a growth strategy is an aggressive approach more often witnessed among Fortune 500 companies than smaller firms. More and more small to mid-sized businesses are using acquisition as a part of their growth strategy, however. For instance, one security and networking solutions provider acquired a cloud security startup for $280 million. The acquisition allowed the first firm to strengthen its market position. It also allowed them the ability to offer clients a service through which they could monitor employee cloud use, allowing clients to protect against potentially harmful practices.
3. Identify the ideal customer. Providing a service or product is about solving a specific problem for a specific group or target audience. The more a business is able to identify their ideal customer, the more they will be able to develop a highly specified approach to marketing and delivering the right product or service. Having a clear understanding of who the company will be servicing allows it to establish lucid marketing objectives. Without a clearly defined market and target audience, marketing plans tend to be ambiguous and do not accurately present the general message of the company.
4. Define key indicators. Effective growth is about measurable change that is responsive to the needs and requirements for the business to expand its reach. While acquisition is a more aggressive strategic approach to expanding, simply expanding market share is not as ambitious. But it can definitely produce substantial results. The key is to clearly define the key indicators of expansion. How will the proposed changes and adjustments be measured? If change cannot be measured, there is no way to effectively assess whether a firm is performing as it should. Each business has certain indicators that directly or indirectly affect its growth. It is imperative to identify these indicators to ensure consistent growth.
Developing the right 12-month growth strategy depends heavily on the business and its market or industry. However, these ideas can be adjusted and applied to almost any situation. Depending on how the deal is worked out, acquisition is likely to be the costliest path to expansion, but it can also be the most concrete.
– Contributed by Carol Evenson, an entrepreneur and professional business consultant specializing in C-level training and business growth. She currently works with organizations across the globe, assisting CEOs with their expansion strategies.
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