After you’ve been in business a number of years, you’ve grown a large customer base, and you’re making plenty of sales, you may start thinking of taking your company to the next level. This means you’ll need to grow your small business. It may sound simple, but growth means different things to different companies. You’ll need to chose what kind of growth is right for you and come up with a strategy to reach your goals.
Business Growth Definition
There are many ways to define business growth. Just a few metrics include higher revenue, profits, or sales, increased value of your company, more customers, or a larger team. To see growth, you only need to increase one of these metrics — others may even shrink. For this reason, it can be difficult to know if your business is actually growing.
What you need to remember, though, is it doesn’t necessarily matter if some aspects of your business are seeing declines while others grow. What does matter is that the areas related to your key business objectives are expanding, as this means you are on track to meet your goals.
How to Calculate the Percentage of Growth in Your Business
If some areas of your business may decrease as others grow, how can you calculate business growth? The best way is to measure business growth as a percentage. This involves examining your growth metric at two specific points in time and turning the difference into a percentage.
For instance, the growth metric you care about could be number of customers and you may want to see growth between the last quarter and this quarter. The calculation would therefore be:
(Total customers this quarter – Total customers last quarter) / Total customers last quarter x 100
Let’s imagine you had 1,600 customers this quarter and 1,250 last quarter:
(1,600 – 1,250) / 1,250 x 100 = 28
Therefore, your growth percentage is 28 percent.
What Is Organic Growth in Business?
Before looking at strategies, it’s also important to note that there is more than one type of business growth. The two main types are organic growth and inorganic growth. Organic growth occurs when your business sees better performance due to the resources you already possess. Inorganic growth, in contrast, means utilizing outside resources: acquisitions, mergers, takeovers, and the like.
Unfortunately, organic growth is not as straightforward as simply leaving your business to its own devices. To see organic growth, you need to prioritize it. You need to optimize your resources to maximize the effects. The great thing about organic growth is that risk tends to be relatively low, as you can continue on the path you’re already on.
The problem, though, is that organic growth is slower than inorganic growth. Plus, inorganic growth has some distinct advantages. For instance, your business may be able to grow even if productivity and revenue fall.
Deciding whether you want to focus on organic or inorganic growth is one of the first things you need to figure out after you decide you want to grow your small business.
Small Business Growth Strategies
With the above in mind, it’s time to look at some growth strategies. The exact strategies you should use will depend on your business objectives, but the following are some of the most popular with small businesses.
1. Enter New Markets
It may be there are markets you are currently ignoring that could be ideal for your offerings. A new market could be another location, a related niche, or a new audience that you can target by marketing to new buyer personas.
2. Increase Market Share
Another option is to gain a greater share of your current market. This means facing your competitors head on. You’ll need to take action to make your products or services the top choice for more customers.
One way to do this is to release more offerings. These could complement your current offerings, be an upgrade, or be a more budget choice. Alternatively, you could try to gain more sales with your existing offerings. You may need to lower your prices, such as selling wholesale or with special discounts, or you could sell bundles.
3. Sell Through More Channels
A useful way to reach more of your current audience is to expand where you sell. If you only have a brick-and-mortar store, you could set up an ecommerce store. If you just have a presence online but have no desire to start a physical location, you could look to expanding onto other ecommerce platforms. For instance, if you only sell through your own store, you could expand to Amazon, eBay, or social media, such as with Instagram Shopping or a Facebook Shop.
4. Joining with Another Business
If you’ve decided inorganic growth is the way to go, you’ll need to find a way of merging with or acquiring another business. Alternatively, you could partner with a non-competitor in the same niche to share a client base or resources. Whatever you do, the choice should be beneficial to both your business and the other company. For instance, it could resolve a skills, knowledge, or tech gap. You may also be able to reduce your workload or lower the risks of undertaking another growth strategy.
Make sure you receive legal advice before you go ahead with any type of partnership. This will ensure you protect your assets.
Obstacles to Business Growth
Even with a great business growth strategy, you’ll likely face some obstacles. Be prepared to tackle them by familiarizing yourself with some of the most common and the ways to resolve them.
1. High Staff Turnover
You’ll struggle to grow if staff are often leaving your business, as this means you constantly need to find and train new employees. This impacts your productivity, your other staff in terms of morale, and your reputation, which can result in a drop in customer loyalty.
To avoid high turnover, you need a strategy to encourage employees to stay longer. This starts with hiring the right people. Then, you need to take action to keep staff at your company, such as by offering ongoing training or mentoring, paying competitive wages, providing the perks employees want, and creating a positive company culture.
2. Lack of Skills
Small businesses often struggle with a skills gap. If you only have a few people on your team, everyone needs to take on a variety of activities, including some that fall outside their job description. Training and education can help, but to avoid low-quality work, it may be necessary to seek outside help. You have two options: hire another employee (this could be outside your budget) or outsource some tasks.
3. Misjudgement of the Competition
You will only be able to determine if it’s feasible to increase market share or to enter new markets if you have a good understanding of your competition. A misjudgement could mean you make a poor decision and your strategy may backfire.
The best way to overcome this obstacle is to do a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. It’s useful any time you want to plan a project or analyze the competition.
4. The Need for Modern Software
Tools and software can help tremendously with all sorts of work processes. In particular, they improve your productivity and the quality of work. The problem is that almost every piece of tech has a cost — and some can be quite expensive. Nonetheless, you need to see software as a crucial investment, or you’ll be putting your team at a disadvantage. Take advantage of free trials and think carefully about what you actually need to ensure you stay within your budget.
5. Cash Flow Problems
When you create a growth strategy, it’s easy to fall into the trap forgetting to account for a changing financial situation. As any type of growth strategy will incur some investment, you may find that you’re unable to afford bills, payroll, or supplies if the amount of cash coming into your business drops even slightly.
For this reason, financial planning is essential before undertaking any growth strategy. You may even need to apply for a loan to fund your idea. Alternatively, you could examine where to cut costs or perhaps wait a little longer before implementing the strategy.
Outsourcing for Business Growth
Hiring all the talent you need in house is often an unnecessary expense. Outsourcing instead allows you to receive support for a variety of tasks without the need to commit to salaries, benefits, and office space. In fact, many small businesses today are seeing growth by outsourcing, not least because it allows them to overcome many of the obstacles to growth. For instance, outsourcing solves the skills gap, the issue of staff turnover, and even the risk of financial mistakes, such as when you outsource a bookkeeper who can manage budgeting.
If you need support with a variety of business functions, your best option is to delegate to a virtual assistant. When you choose MYVA360, you’ll gain access to a whole team of virtual assistants who have helped small businesses grow. You’ll also receive the tools you need for business processes at no additional cost. Contract your virtual assistant for small business with a special 10-percent discount when you use schedule a consultation.