7 Steps To Grow Your Small Business

“In Business, Everyone wants to live on top of the Mountain……But all the Happiness and Growth occurs while you’re climbing it”

While mentioning this proverb, I rarely find happy faces during the climbing stage or to be more precise entrepreneurs across the globe, find this stage as the most difficult stage to sustain.

In 1998, two Stanford University graduates Larry Page and Sergey Brin started their office in a garage in California, but nobody knows it would grow to become the biggest network in the world – “Google”.

Like Google, if we take HP, AMAZON, MATTEL, MICROSOFT or APPLE they all have such humble beginning from garage or single room office and grow to the top. While admiring the growth from such a low profile, we all need to comprehend how meticulously they climbed up the ladder with strategic planning and choosing the right area of their growth to success.

Seven Steps To Grow Your Small Business – in this blog seven steps or strategies for every small business to grow in my perspective was noted down, an organization can follow several different avenues for achieving profitable and sustainable growth, here generic steps which are simple to adapt are explained.

These seven steps to success was something which I feel good from my experience working with various local and international business groups, where am focusing mainly on Mentorship, Business Support, Organizational Development, Networking and Investment opportunities.

7 Steps To Success …….

1.      Market Penetration – Concentrated Growth Strategy.

One of the most common growth strategies is to focus on what you do best by emphasizing your current products in your current markets. This strategy is also called the concentrated growth strategy because you’re thoroughly developing and exploiting your knowledge and expertise in a specific market with known products.

Market penetration refers simply to growing with existing products in existing markets. This can be achieved by attracting new users in existing markets by two ways. One is by attracting and gaining competitor’s customers. Another is by influencing current customers to use more of the organization’s products / services. Market penetration generally involves the least risk and the deployment of minimal resources.

Tactics commonly using in market penetration;

  • PRICE ADJUSTMENTS
  • INCREASED PROMOTION
  • MORE DISTRIBUTION NETWORK
  • PRODUCT IMPROVEMENT.

2.      Geographical Expansion – New branch or Franchise

Once you feel your business got fully settled but not achieving the necessary growth from your area of operation, one of the immediate options is to expand your operational horizons geographically. Opening another location or geographical expansion refers to growing with existing products in new area or location. This step involves decision about the target niche, entry mode and control system. You should be accountable about the profits and surplus money that you are generating from current locations.

While opening branch offices are good for the growth factor, few of the points to be overlooked are on the increase of recurring cost by ways of man power and infrastructure. Here comes the opportunity of Franchising for geographical expansion.

Franchising is a very good option to grow your small business successfully. Understanding your business inside out is very much important before franchising a business. From a startup franchiser point of view, first concentrate on developing a business model and the administrative and legalities that involve in franchise business. The future of business is with entrepreneurs who are coming with effective franchisee models and focus on proper retail management.

3.      Launching New Products Or Services

Developing a new product in the same target after understanding the market is one of the effective ways to grow your small business. When planning to launch a new product, primary focus should be given to People and not the Product. This strategy requires good innovation capabilities and market research. An organization can grow by simultaneous movement into new product and market domains. Launching new product is of course a very resource intensive strategy.

A classic example of growth achievement by product innovation can be seen in Gillette’s success in India. Their success in India hinged on its capacity to innovate their product for Indian market after understanding the consumer attitude. Through effective product innovation and proper launching strategy Gillette could shift from a market-driven to a market-driving approach and achieved tremendous growth.

4.      Vertical Integration

 Vertical Integration is something happening in today’s global business world for the growth of business, this is often closely associated to vertical expansion, which is the growth of a business enterprise through the acquisition of companies that produce the intermediate goods needed by the business or help market and distribute its products.

Vertical expansion is also known as vertical acquisition, which can also be used to increase scales and to gain market power. The acquisition of ASIANET COMMUNICATION LTD by M/s Star Group is an example of forward vertical expansion or acquisition. ASIANET is a satellite TV company though which Star Group can distribute its media content, news, movies and television shows

Alibaba, the fastest growing Chinese online company makes use of vertical integration to its full potential to gain more market share and today Alibaba is not only online portal but beyond that and built its leadership in the market by gradually acquiring complementary companies in a variety of industries including products, delivery and payments.

5.      Diversification

Diversification is one among the main growth strategies defined by many management gurus, but it also has the highest level of risk and requires the most careful investigation before proceeding. Diversification is a strategic decision to be taken by organization, to enter into a new market or industry in which business doesn’t currently operate, while also creating a new product for that new market.

Apart from the risk part of great uncertainty on organizational success, diversification might necessitate significant expanding of human and financial resources, which may detract focus, commitment, and sustained investments in the core industries. Therefore, a firm should choose this option only when the current product or current market orientation does not offer further opportunities for growth.

Even though there is risk involved in diversification, we have several examples where organizations achieve tremendous growth by diversification;

  • Shift of HCL from Hardware to Software.
  • Move of Apple from PCs to Mobile devices.
  • Move of Virgin Group from music production to travel and mobile phones.
  • Walt Disney moved from animated movies to theme parks and vacation properties.
  • CANON diversified from Camera into an entirely new range of office equipment.

6.      Merger & Acquisitions

Strategic alliances of two or more companies for growth and market expansion is something very common these years and we have witnessed several of such huge merger and acquisitions in recent years also.

Few of such Merger & Acquisitions are as follows;

  • TATA STEEL – CORUS, merger made TATA the fifth largest steel producer.
  • VODAFONE – HUTCHISON ESSAR, made them one of the top telecom player.
  • RANBAXY – DAIICHI SANKYO
  • TATA MOTORS – JAGUAR LAND ROVER
  • VERIZON COMMUNICATIONS – VERIZON WIRELESS.
  • AT&T Inc. – TIME WARNER
  • MICROSOFT – LINKEDIN
  • COMCAST CORPORATION – AT&T BROADBAND
  • GLAXO WELCOME PLC – SMITHKLINE BEECHAM PLC
  • JP MORGAN CHASE &Co – BANK ONE CORPORATION.

Merger and acquisitions are very effective growth channels, even if considered as an inorganic way to grow your business. A merger is a phenomena where two organizations decide to come together to form a single new organization. In this case owners of both two organizations become owners of this new entity. Acquisition is a phenomenon where one organization takes over the ownership of another completely.

7.      Online Presence & Social Media Optimization

Finally the impact of Internet on the business world got already accepted and everyone geared up to make use of the wide scope of online business for the growth of the business. It’s not only online presence but today the total shift happens to digital marketing of business over the traditional print media and other advertisement medias.

The main deciding factor over why online marketing is more beneficial for a business than offline is because this is where 90% of your customers will be. We are in a new era where so many people of different ages and genders are all accessing the internet globally. For your business to be an ultimate success, you will need a combination of both online and offline marketing however, online marketing is where you will be able to connect with your audience on a broader scale.

When analyzing the Internet’s effect on the global market and small business, it is important to remember that the Internet carries information as well as commerce. The effects of instant information can be as powerful as the ability to reach a worldwide audience. But small business still needs to carefully examine the effects of the Internet on international markets to understand whether or not an online presence is the right move.

For any small business, online presence and social media gives immense scope for growth in many ways, particularly social media gives great marketing opportunities and benefits such as:

  • Promote your brand and business.
  • Effective communication to customers about your product
  • Customer feedback mechanism will be active.
  • More reach and branding.
  • Effective client relation management possible.
  • Target oriented marketing possibility.
  • Cost effective compared to other solutions.
  • Personal communication possible.
  • Fast and easy to manage.

Today many of the business groups started using online technology to support their marketing efforts, apart from using general social media services like Facebook, Twitter, YouTube, blogs etc. This includes:

  • AMP for more effectiveness in the mobile devices.
  • Mobile Apps development.
  • Online payment gateway integration.
  • SEO and SME.

To end this blog, I would like to mention that entrepreneurship is not an easy task like starting a venture when the entrepreneur bug bites you, but how you can sustain in your dream venture and how effectively you can build teams around you to exploit opportunities previously untouched. Entrepreneurship is a team effort where many people come together to support your idea and together climb up the mountain with a happy face.

Author:
Dr. Girish Krishnan 
Management /Strategy Consultant & Mentor