Business growth strategies for small business owners

Key takeaways

  • A growth strategy is a plan of action you create to grow your business
  • There are five stages of growth that most businesses go through, and knowing which stage you’re in can help you figure out the best way to advance
  • Learn how to apply 11 business growth strategies to grow your business from one stage to another

Statistics show that about half of small businesses fail within the first five years and only one in three survive past 10 years. While these statistics are sobering, they aren’t hopeless. There’s always risk involved when owning a business, but there are ways to improve your chances of success.

Knowing which stage of growth you’re in—and having the right business growth strategies—can help your business not only survive, but thrive.

 

What is a business growth strategy?

A business growth strategy simply represents the methods you use or the actions you take to grow your business from one stage to another.

Business growth means different things to different people. While some consider it an increase in sales and revenue, others interpret it as opening another location or market expansion.

No matter how you define growth, your business growth plan should be based on market research. You must consider your business structure, the product or service you offer, and your target audience. You also want to outline your goals—both short-term and long-term—for business growth at different stages; a timeline to measure progress; and the business growth strategies you intend to use during each phase, get the best assistance from professional innovation consulting firms.

5 stages of small business growth

Most big companies today started as a small business—and they didn’t get big overnight. Instead, they evolved over time, from one stage to another, to become what they are now.

Most businesses go through five different stages of growth, each with its own set of opportunities and challenges. Known as a business life cycle, some businesses may go through all five stages, while others may only experience a few, depending on the type of business it is and other factors.

Once you identify the current growth stage of your business, you’ll be able to choose the right business growth strategies to progress to the next phase.

Stage 1: Seed and development

Your new business starts at this stage while it’s still an idea you’re exploring and fine-tuning. In this stage, you’re doing a lot of market research and asking questions to verify and determine whether your business idea is a good one that will attract customers.

Stage 2: Startup

In this phase, your new business is open, and you’re starting to attract new customers. This is also the time when you may begin to encounter unexpected issues with customers, cash flow, or your day-to-day operations. The startup stage is about survival and adaptability, so it’s crucial to adjust and figure things out as you go until your business achieves some form of stability.

Stage 3: Growth and establishment

At this stage, a new business is generating a steady income with a growing customer base. However, the business may be finding it tough to break even. The focus here is to improve your bottom line as quickly as possible—perhaps it’s by hiring qualified employees, investing in equipment, increasing productivity, or reducing waste.

Stage 4: Expansion

Businesses at this stage have become stable, profitable, and established in their industry. But expansion is hardly the time to sit back and relax. In this stage, business owners typically explore other opportunities. For example, it might mean getting a bigger share of the market through partnerships, new product development, or franchising. The goal in this phase is to expand, but to do so without overextending yourself (or your resources).

Stage 5: Maturity and possible exit

In the maturity stage, a business has shown steady profits year after year. For some business owners, this is the right time to exit the business by selling it or handing it over to a new CEO. For others, this might be the time to come up with a new expansion strategy for the business.

11 business growth strategies

Female cafe owner with clipboard

Different business growth strategies work at different stages of growth, and each growth strategy has its own level of risk. Here are 11 business growth strategies that can help set you up for success.

1. Market penetration

This growth strategy primarily aims to increase market share by selling more of your existing products or services in your current market. It’s a low-risk strategy that many small- and medium-sized businesses use.

Here are some market penetration strategies:

  • Charge lower prices compared to the competition
  • Attract new customers with special offers and discounts
  • Encourage current customers to buy more with volume and bulk discounts
  • Increase the number of distributors and dealers your business uses

2. Product expansion

This growth strategy involves marketing new products and services in your existing market to capture a larger share of the market.

Examples of product expansion include:

  • Creating varieties of an existing product; for example, a soft drink company that produces its main soft drink in different flavors
  • Updating an existing product when the features are no longer attractive to potential customers
  • Introducing a new product line to your business
  • Bundling your services into different packages and tiers

3. Market development or expansion

For a growing company struggling to find its feet in the current market (maybe due to stiff competition), market development is a growth strategy that can help.

Also known as market expansion, it involves selling existing products and services in a new market to increase market share. For best results, you need to have thorough market research to gain a solid understanding of the new market and its customer base.

A few examples of market development include:

  • Selling your products or services in another state or country
  • Selling to a different group of users or target audience
  • Franchising, by giving franchise opportunities to other businesses or individuals