If you decide to make growth rather than consolidation a priority for your business, then it is important to first evaluate which strategy is best for you. For those that get it right, growth can bring security and stability to your business as well as long-term profits.
Once a business moves on from the start-up phase and begins to grow, assessing the company’s performance by looking at turnover, sales, profits, market share, and number of staff allows you to measure its success. However, it is worth remembering that you may need to look at a combination of these figures to build a realistic picture. For example, although sales may be high, if the margins are narrow then this means low profits for the business.
Growth and development are important even if your business is currently performing well, as otherwise, you risk giving your competitors room to grow and take a market share that results in your position being weakened.
If you feel your business is performing successfully and it is time to grow, it is important to ensure the structure of your business can handle that growth and that it is running efficiently. It is vital to make sure that the core of your business continues to perform and that your current customers are not neglected.
It is important not to make this mistake, as your existing client base is what provides your cash flow and not maintaining your high level of service to them could stunt your growth. Even if you think your company is ready for growth based on sales and profit figures, timing is important as if your business is already working to full capacity it may not be able to cope with expansion.
Having the right systems and resources to ensure your existing business can continue to operate whilst you target new areas is key. You may need to consider employing additional staff members and outsourcing certain operations and tasks to give you more flexibility.
For example, if your company still exists on paper records and documents, you may need to consider going digital before implementing a growth strategy. Otherwise, your business could be burdened with the unnecessary costs associated with additional storage. Click here to find out more about digital transition.
If you do decide to make this conversion in preparation for growing your business, it can be difficult to know where to start and how many of your paper records to digitise. Using the services of a company such as Iron Mountain can make the process much easier and help to streamline your document management.
Outsourcing this process can also provide your company with added security, which is a definite advantage during a period of growth. More information on Iron Mountain document scanning will show you how they can store and archive your documents in a secure offsite environment. Passwords, encryption, and other measures can also be employed to protect your records.
Whatever changes and additions you decide you need to make, it is essential that the current state of the company is comprehensively reviewed to ensure your consolidation and growth are as effective as possible.
There are many different options for growth including increasing your market share, mergers, joint ventures, and diversification to name a few. Increasing market share may seem like the most straightforward option, but it still requires a detailed understanding of your customers as well as those of your competitors if you are take some of their market share.
In order to obtain a higher percentage of the market share, you first need to understand your competitor’s strengths, why customers buy from them, and how you can attract them to buy from you instead. There may also be other possible consumer groups that you have not targeted in the past but who may need your product. Alternatively, is there another potential use or purpose for your product that you could promote?
Having a clear vision of your own unique selling point will make attracting new customers easier. There may also be other businesses apart from your direct competitors whose customers would be interested in your product. For example, if you sell prams then maybe you could target the customers of a baby food manufacturer.
Another possible target for increasing market share would be customers who used to buy from you but have since stopped. Understanding why and changing your pricing, service level, or distribution where necessary could benefit them, although it is important not to upset current customers in the process.
Diversification requires a careful analysis of the cost benefits versus the risks, as limited resources can be a problem. Types of diversification include selling related services or products to your existing customers, so for example if you are a retailer selling white goods, you could diversify by selling extended warranties to customers who have bought from you. Other options include selling your current products into new markets, or creating new products for new markets.
Diversification can have the benefit of reducing the impact on your business of market change. So by selling more than one type of product or service you will not be left exposed if sales of one drop off.
Joint ventures and partnerships can combine resources, equipment, skills, knowledge, experience, and customer bases in order to improve existing products or bring new ones to the market. The only potential pit falls are staff or management issues and shared decision-making. It is important to be wary when choosing whom to collaborate with; the business must not pose a competitive threat and must compliment yours. It is also essential to clearly outline and define the terms of the partnership.
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