Just because you’re running a small business, doesn’t mean it has to stay that way. With the start of the new year, now is a great time to plan and seek out business expansion.
If you’re wondering how to grow your business or considering business growth, you might be wondering: in what ways can my venture expand? And how can I achieve this?
Today, we’re going to delve into this topic and tell you everything you need to know about expanding your small business in 2021.
Why Grow Your Small Business?
While expansion isn’t compulsory, it is a popular option for many small businesses due to the following advantages it offers:
- Reaching new markets
- Increasing your customer base
- Developing additional income streams
- The ability to purchase greater stock or resources
- The generation of greater sales and profit (and therefore, greater working capital)
- Reducing external risks, such as competition
- Greater influence over the market price
- Higher cash flow, which can be invested back into your business
Types of Small Business Growth Strategies
Wondering how to grow a business? There are 5 different types of small business growth strategies that small businesses should use when looking to grow. Below, we discuss each strategy in more detail, along with what it involves.
Market penetration simply includes expanding your consumer base in an already established market. Out of all of the types of business expansion, it isn’t only the most affordable but is also the most popular among SMEs.
With market penetration, businesses aim to increase their overall market share through tactics such as advertising, marketing, and price changes.
Market expansion involves offering a product or service to a wider section of an existing market or a new market altogether. Most often, small businesses will seek out new territory or demographic in order to expand their customer base.
When it comes to how to expand small business opportunities, product expansion is a great area to focus on. By keeping your base market but adding new products or services you can further appeal to your existing customers. This could even include something as small as an upgrade, revision, or adding a new product entirely
Diversification is when a business enters into a new market or industry in which they don’t currently operate, while also creating a new product for that new market. It is perhaps the riskiest model of business expansion and requires plenty of in-depth market research before taking the plunge.
Business acquisition is when you acquire a company, usually a competitor, to further strengthen your own business. An acquisition occurs when a buying company obtains more than 50% ownership in the target company.
5 Tips for Business Growth in 2021
While there are endless opportunities for business expansion, we’ve narrowed these down to 5 of the most popular tips to help improve your chances of success.
Sometimes, automation is the key to quickly scaling and growing your SME. This allows you to take important, but repetitive tasks (such as a sales funnel, for example) and completely automate the process, freeing up some of your own time.
Be Aware of Your Competition
While we don’t recommend you follow everything your competitors are doing (as this will never help you stand out from the pack), it is advised that you keep on top of who they are and what strategies they’re employing. Thoroughly research your competition and determine what it is that you already offer (or can offer) that they don’t.
Don’t Forget Your Existing Customers
Some people are so focused on how to expand small business opportunities that they forget about their existing customers and the opportunity under their nose. If you don’t already have systems in place to nurture your existing customers, then you’d better do so ASAP. After all, it costs up to three times more money to acquire new customers than it does to sell something to an existing customer. With an effective strategy like this in place, you can then have more flexibility and cash flow to acquire new customers.
Form Strategic Partnerships
This will take some additional research and groundwork, but if you’re able to form strategic partnerships with other key places in your industry or market, then it can open a whole new world of customers, sales, and profit.
Think About What You Can Offer
One of the key strategies for business expansion is offering additional value to your customers. Think about your target audience, as well as what their pain points are. What complementary products or services can you offer to your market to help them overcome these pain points?
Now that you know the key elements on how to grow a business that will lead to successful business growth, there’s no reason why you can’t expand your small business in 2021. Best of luck!
This guest post was written by Melanie Doncas of Lumi Finance.
Melanie is a content writer for Lumi Finance, an alternative lender in Australia who provides business loans from $5,000 – $100,000 to small-medium enterprises. Lumi prides itself on offering straight-forward and fully-transparent loans to give ventures the financial boost they need.