Grow Your Business Successfully: Why and How
“Growth is never by mere chance; it is the result of forces working together.” — James Cash Penney, Founder of JCPenney
Why Grow Your Business
Growth is no longer an option today — it is a must if we want to avoid stagnation and losing the edge to our competitors. Whether you are a small business or a large conglomerate, growth will keep you going in a world that promotes survival of the fittest.
Here are the most common reasons why you should grow your business:
· To retain or increase market share and hence win the confidence of business stakeholders
· To realize economies of scale and economies of scope through engineered growth
· To survive against competitors who are constantly growing
· To buffer against low-points in business cycle
· To secure the fullest benefits of various govt. schemes and policies
Now that we know that growth is indispensable, let us understand how to measure business growth.
Measures of Business Growth
In the simplest sense of the term, growth encompasses sizeable increase in one or more of the following indicators:
Increase in business revenue is often a key indicator of growth. Often, revenue growth is generated by both increase in price and increase in sales volume. Revenue growth is measured as a percentage against a given time period — e.g. 200% increase in revenue (or doubling of revenue) over a period of 5 years.
Sometimes, a business may be looking at purely transactional growth and not growth due to rise in price. In such situations, growth in sales volume is a more appropriate measure. For example, 50% increase in units sold of Product A in 2 years.
When your business rakes in higher absolute profits, either you claim a better market price or you sell larger volumes at the same margin. Higher profits indicate growth that emanates from better value-generation by businesses.
Be it increase in team size, or increasing your asset base, or just diversifying into new product lines, size matters when it comes to business growth. Growth in size often requires additional capital infusion.
· Market Share
When you increase your customer base to capture a larger pie of the target market, your business grows by market share.
Note that many of the growth measures overlap with each other!
Let us now look at successful growth strategies to enable business growth.
· Market Expansion and Penetration
Growth by improving distribution is a time-tested strategy. You could either penetrate deeper into your current market to increase your target customer base (Market Penetration) or you could tap into new markets with your star product. Distribution and marketing is of paramount importance in both these approaches.
· Product Diversification
While market expansion and/or penetration entails growth through the current product/s, product diversification is growth through adding new products and product lines. The premise here is that either your current product has saturated its market or developing new product makes more business sense than cracking new markets for your existing products.
· Acquisitions and Investments
The quintessential inorganic growth stems from mergers, acquisitions and take-overs. While small businesses were formerly perceived to be not so active in this space, times are changing. Today, small and medium businesses are either acquiring or making significant investments in allied businesses to catapult their growth to the next level.
· Leveraging Partnerships
Whether it is with individuals or organizations, partnerships go a long way in securing sustainable growth by banking upon strengths of partners. Co-branding, joint ventures, distribution partnerships and technology partnerships are the most common ways in which businesses leverage partnerships to enable growth.
· Capital Infusion
Fund-raise is the lifeline of businesses looking to grow. The best growth strategies can crumble if adequate and timely capital infusion does not support them. Securing equity investments, debt investments, CSR support, impact investment from foundations, and govt. funding schemes are the common ways to raise funds for growing your business.
Grow Your Business Today
Even if you have not considered formulating growth strategies for your business yet, this is the right time to do so. Remember, that the best growth strategy for your business depends on your industry, size, market influences, legal factors and your growth objectives. Growth is a long-term and ongoing process that can be best implemented through comprehensive understanding of your business and the industry you belong to.
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