Growth Planning Strategy for your Business

According to Darren Dahl, Director of the Robert H. Lee Graduate School in British Columbia, writing in INC, the statistics all point to the miniscule chances that a small businesses will actually be made into a big one. Only 0.1% of companies ever reach the demarcation line of a quarter of a billion dollars in annual revenue. “Most businesses start small,” he says, “and stay there.”

For CEOs of small companies who are not satisfied with those predictions, there are, in spite of everything, examples of companies that have made the transition into thriving large businesses. Keith McFarland, former dean of the Pepperdine University School of Business and Management and author of Bounce: The Art of Turning Tough Times into Triumph and the recent bestseller entitled The Breakthrough Company: How Everyday Companies Become Extraordinary Performers emphasizes the importance of putting together and persisting in a growth strategy for your business.

The Business Growth Planning strategy resembles a kind of ladder, he says. Lower rungs on the ladder present the least risk, but less growth impact. Initially, small business should focus on the lowest rungs of the ladder then gradually move their way up. Each new rung brings more opportunities for fast growth balanced by more risk.

  1. The least risky step is Market Penetration, that is, selling more of the current product to current customers. Package the product in larger volume, so that once purchased the competition for that product is essentially eliminated at least temporarily.
  2. The next rung up is Market Development. Devise a way to sell more current product to an adjacent market–moving into another state or city for instance. Opening branch offices or stores involves increased risk but are definitely on the road toward business expansion.
  3. Selling through Alternative Channels is the next rung. Develop strategies for pursuing customers in a different way. Selling products online or trying inbound marketing are examples. Some businesses set up service or product rentals, for instance.
  4. A classic strategy that involves some risk but may bring big rewards is Selling a New Product to Existing Customers. Sometimes markets for existing products will reach a saturation point and the only path to growth is to develop something new to expand the interest of old customers. Selling to existing customers is considerably less risky than the last step.
  5. Selling a New Product to New Customers is the pen-ultimate step in the growth model. If an established base of sales for older products is established, often the confidence built around the old product will transfer to a new one. This is a risky strategy involving investment and energy, but the potential rewards in business expansion could be worth it.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.

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