Every color, every language, and every custom you can imagine weaving through an Armani- and Rolex-studded mall. We claim to celebrate diversity in America. But when it comes to companies, we prescribe one size fits all. This realization hit me hard this week.
The statistics are grim. An even more microscopic group, just 0. In other words, most businesses start small and stay there. So I studied the companies who had done it to learn small business planning and strategy lessons.
Developing a Growth Strategy: Intensive Growth Part of getting from A to B, then, is to put together a growth strategy that, McFarland says, "brings you the most results from the least amount of risk and effort. The bottom line for small businesses, especially start-ups, is to focus on those strategies that are at the lowest rungs of the ladder and then gradually move your way up as needed.
As you go about developing your growth strategy, you should first consider the lower rungs of what are known as Intensive Growth Strategies. Each new rung brings more opportunities for fast growth, but also more risk. The least risky growth strategy for any business is to simply sell more of its current product to its current customers—a strategy perfected by large consumer goods companies, says McFarland.
Think of how you might buy a six-pack of beverages, then a pack, and then a case. Finding new ways for your customers to use your product—like turning baking soda into a deodorizer for your refrigerator—is another form of market penetration.
The next rung up the ladder is to devise a way to sell more of your current product to an adjacent market—offering your product or service to customers in another city or state, for example.
McFarland points out that many of the great fast-growing companies of the past few decades relied on Market Development as their main growth strategy. For example, Express Personnel now called Express Employment Professionalsa staffing business that began in Oklahoma City quickly opened offices around the country via a franchising model.
Eventually, the company offered employment staffing services in some different locations, and the company became the fifth-largest staffing business in the U.
This growth strategy involves pursuing customers in a different way such as, for example, selling your products online. When Apple added its retail division, it was also adopting an Alternative Channel strategy. Using the Internet as a means for your customers to access your products or services in a new way, such as by adopting a rental model or software as a service, is another Alternative Channel strategy.
A classic strategy, it involves developing new products to sell to your existing customers as well as to new ones. If you have a choice, you would ideally like to sell your new products to existing customers.
New Products for New Customers. Sometimes, market conditions dictate that you must create new products for new customers, as Polaristhe recreational vehicle manufacturer in Minneapolis found out.
For years, the company produced only snowmobiles. Then, after several mild winters, the company was in dire straits. Fortunately, it developed a wildly-successful series of four-wheel all-terrain vehicles, opening up an entirely new market.
Similarly, Apple pulled off this strategy when it introduced the iPod. What made the iPod such a breakthrough product was that it could be sold alone, independent of an Apple computer, but, at the same time, it also helped expose more new customers to the computers Apple offered.
If you choose to follow one of the Intensive Growth Strategies, you should ideally take only one step up the ladder at a time, since each step brings risk, uncertainty, and effort. The rub is that sometimes, the market forces you to take action as a means of self-preservation, as it did with Polaris.
Sometimes, you have no choice but to take more risk, says McFarland.
The problem is that some 75 percent of all acquisitions fail to deliver on the value or efficiencies that were predicted for them. Nevertheless, there are three viable alternatives when it comes to an implementing an Integrative Growth Strategy.
This growth strategy would involve buying a competing business or businesses. McFarland says that many of breakthrough companies such as Paychexthe payroll processing company, and Intuitthe maker of personal and small business tax and accounting software, acquired key competitors over the years as both a shortcut to product development and as a way to increase their share of the market.
A backward integrative growth strategy would involve buying one of your suppliers as a way to better control your supply chain. Doing so could help you to develop new products faster and potentially more cheaply. For instance, Fastenala company based in Winona, Minnesota that sells nuts and bolts among other thingsmade the decision to acquire several tool and die makers as a way to introduce custom-part manufacturing capabilities to its larger clients.
Acquisitions can also be focused on buying component companies that are part of your distribution chain.A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope.
While a strategic plan is a type of business plan, there are several important distinctions between the two types that are worth noting. A strategic plan is primarily used for implementing and managing the strategic direction of an existing organization.
Fulton Bank offers planning and strategy tools to help small businesses gain valuable insights and facilitate growth. By expanding access to capital, counseling, federal contracts, disaster assistance and entrepreneurial education, SBA is giving small business owners the tools they need to strengthen our economy, drive American innovation and increase our global competitiveness.
Strategic planning is the link between a great idea and business success.
Based on the purpose for your business, a smart strategy helps you develop a plan of action. To help you and your team stay on track, meet at regular intervals to assess and enhance your strategy.
Fulton Bank offers planning and strategy tools to help small businesses gain valuable insights and facilitate growth.