Learn more about four key strategies to grow your business, the upsides and risks of each one, and tools you can use to help you to expand via your chosen approach.
At a glance
- The four key strategies to grow your business are product development, market development, diversification and business development.
- To reap the returns and rewards, you need to put time into all four of these strategies.
- It’s likely than more than one strategy, or a blend of strategies, can help you grow your business.
The size, shape and scale of businesses operating in the SME sector is often characterized by the supplier, and the customer, having an interpersonal relationship rather than a transactional relationship that can be common in larger entities. It can be argued that the people aspect is even more significant in smaller businesses than large scale operations. With that in mind, David Humby, Business Growth Advisor at Elephants Child looks at the four key strategies available to grow your business.
1. Product development
Embarking on developing new products for markets that the business is currently operating in has several challenges. Firstly, the time required to develop a new product, or service. It’s not an overnight solution. Does the business have the skills in house for the new design development? There’s the initial concept of the new product, the design phase, prototyping, potentially tooling and engineering and of course the need for sector and client approvals and qualifications.
All these activities are loaded with associated costs. Even once the product is ready to launch – which will attract further costs such as sales and marketing and supply chain – the product needs further time to gain traction and ramp to the point that development costs are recovered and bottom-line rewards come through.
2. Market development
An alternative strategy to product development is market development whereby existing products and services are sold to new markets beyond the existing reach. These markets could be new in geographical terms or sectors or product applications for example.
It’s likely that new qualifications and approvals will be required and if new international regions are being targeted then there is a host of new administration challenges such as credit terms, foreign currency transactions, freight and duty complexities as well as everyday challenges such as language and time zone differences. Not having the familiarity with new clients in new markets means starting again on the customer relationship. These take time to build in all aspects from the personal relationships, to trust, to service, and product quality.
These new markets will also be dominated by the incumbent competitors who will have a foothold and existing client relationships. It will take time to develop and build sales and time = money.
3. Diversification
Considered the highest risk strategy which sees the combined commercial challenges of new products being developed for new markets. As we noted earlier, individually the strategies of new product development and market development are faced with cost and time headwinds. And, whilst potentially being the strategy that can yield the highest return, it is also fraught with being the strategy that can create the biggest loss in many respects.
4. Business Development
Product Development, Market Development and Diversification all three have differing levels of cost and risk attached to them. They also have the potential for upsides, which, after all, is what growth is all about. They are all characterized by needing time to be put in place and reap the returns and rewards.
Juicing it: growing business within existing client base
Another strategy, which can be considered the lowest level of risk, is developing business within an existing client bank. The caveat being there is opportunity for growth with existing customers.
At elephants child we run a process known as Juicing It. We’re squeezing the lemon so to speak. What opportunities exist to grow our business with our existing clients?
On the face of it, we may feel we have all the business we can get from each client but is that always the case? For example, can we upsell to the client with higher performance products or services that may have the added advantage of future-proofing the customers position, while typically helping our business through being higher revenue and margin propositions. Can we cross-sell to our existing customers with added features such as service agreements or extended warranty offerings thereby generating incremental revenue?
The Juicing It strategy for growth is a well-developed but simple set of prompts that drive an assessment profile for each unique customer. At the heart of it is reaffirming
that we truly and comprehensively understand our customers by asking ourselves these questions
- What drives them, what are their pain points they need resolving?
- What are the needs of the clients?
- What makes individuals tick?
- Do we really know the decision making and buying process of each of our clients?
- Are customers aware of our full portfolio of product and service offerings?
- Are customers themselves in growth mode?
- Are they profitable customers for our business?
- Are there opportunities for us to grow our business or share of business with them?
Implementing the Juicing It strategy
Conducting this exercise, often using a pareto approach to prioritise our actions, allows us to analyse our current, and most importantly, future revenue opportunities with each client. This then forms the basis of an account or action plan.
The plan can be integrated into a formal CRM system or a system that is fit for purpose for the size and shape of the business. It also helps identify and classify each customer. Are they Stars, Question Marks, Cash Cows or Dogs? If they’re not stars, can we move them into this phase with the right approach? If they’re Dogs, we can decide to professionally disengage with them if that is appropriate.
Running the Juicing It process also helps as a gap analysis and will throw up areas that we can use to firstly retain, then consolidate, and ultimately grow our customer relationships.
Which strategy should we implement?
Each of these strategies has their own nuances for upside along with the potential challenges in implementation. If we truly want to scale our business then, over time, it is likely than more than one strategy, or a blend of strategies, needs to be applied.
If you’re looking for near-term growth, then business development activities such as Juicing It has the potential for here and now returns that far outweigh the costs to conduct the process. They put a business on the path for growth and also creates a closer relationship and bond with the client.
Need support?
We can help you take your business to the next level. Get in touch today.
Elephants Child are an external growth adviser and SME specialists who have been carefully selected by St. James’s Place. Their services are separate and distinct to the services carried out by St. James’s Place and their opinions are not necessarily shared by St. James’s Place.
SJP Approved 24/01/2025