How to build a business growth strategy
Growing a business is hard. It’s even harder to do when you don’t have a business growth strategy. In our last blog, we discussed six business growth strategies, including:
- Market penetration
- Product development
- Customer retention
- Strategic partnerships
- Employee satisfaction
- Customer Acquisition
In this blog, we’ll share a framework you can use to build an effective growth strategy. Let’s dive in!
What is a growth strategy?
A business growth strategy is a plan that outlines how a company intends to expand its operations and achieve higher levels of profitability. This strategy involves identifying opportunities, allocating resources, and implementing specific actions to achieve sustainable growth. A growth plan is usually a one to two-year roadmap that includes your goals and benchmarks.
Having a well-thought-out growth plan enables you to take your business to the next level, beat out competitors, and increase profits.
How to develop a growth strategy
1. Analyze your business
Before building a growth strategy, we recommend creating a SWOT analysis. This involves analyzing your strengths, weaknesses, potential threats, and opportunities. Of course, you can improve weaknesses, but it’s also possible to double down on strengths.
You can identify your strengths and weaknesses by gathering quantitative and qualitative data about your business. Reviewing profit and loss statements, sales data, and balance sheets will help you dig deeper.
You should also look at your market to identify which competitors are threats and where there may be untapped opportunities.
2. Choose your goals
Now that you have a better idea of where your business stands, start asking where you want to go. Business growth strategies are usually 1-2 year plans, but you can think of goals as far as ten years.
Here are some questions to consider when setting your goals:
- Where would you like your business to be in 1-2 years?
- Where would you like to be in 1-2 years?
- How will these changes improve your business?
- What will it take to get there resource-wise?
- What changes will you have to make?
- What challenges will you face, and are they worth it?
These questions will help you understand the impact that a successful growth strategy will have on your business and life. It will also help answer what kind of growth strategy you’ll need to reach specific goals. In step one, we started at the beginning, or the present day. In step two, we work our way backward to set realistic objectives.
3. Choose a growth strategy
You know where your business is and where you want it to go. Metaphorically, you have two pieces of bread, and now you need some filling.
In our last article, we discussed the six top business growth strategies. Let’s recap them briefly.
- Market penetration: Market penetration focuses on increasing a company's market share. This can happen within its existing market or customer base.
- Product development: Product development involves creating new or improved products.
- Customer retention: Customer retention focuses on maintaining and nurturing existing customers.
- Strategic partnerships: A strategic partnership is an arrangement between two or more businesses. The goal is to achieve mutual benefits they may not attain alone.
- Employee satisfaction: Employee satisfaction attempts to measure employee happiness. This can be the result of material factors like compensation and intangible elements like culture.
- Customer Acquisition: Customer acquisition refers to the process of attracting new customers. Its strategies and activities aim at converting potential leads into customers.
From these six business growth strategies, you have a decision to make. Which one of these strategies will have the biggest impact on your business? It may help to get an outside, impartial perspective before you move on to step four.
4. Choose your KPIs
As the saying goes, “What gets measured gets managed, and what gets managed gets improved.”
Each of the six business growth strategies is a high-level goal. Let’s say, you want to improve customer retention. In that case, you need to drill down to the metrics that will drive that growth.
For example, you may look at the following metrics:
- Lifetime Value (LTV): The total amount of money they will spend with a business over a lifetime.
- Repeat Purchase Rate: The number of customers who have purchased more than once.
- Net Promoter Score: NPS is a measurement system that helps companies track the likelihood of customers recommending a business.
- Churn Rate: The rate at which customers stop doing business with a company over a given period of time.
These key metrics will help you understand if you’re hitting your goals. Ideally, you’ll pick an OMTM or One Metric That Matters.
5. Drive team alignment
Companies that create and execute successful business growth initiatives do two things.
- They set SMART goals that are Specific, Measurable, Attainable, Realistic, and Time-Bound.
- They clearly communicate goals and ensure team alignment on key responsibilities.
If you want to improve your customer retention KPIs, every responsible department needs to be on board. Product development needs to receive feedback from customer support to hear about potential bottlenecks. Marketing needs to communicate with customer support to share customer wins. So on and so forth. Cross-channel communication is crucial to the success of every business.
Build a successful business growth strategy
It’s easy to get stuck in the weeds as a business owner. How often do you only focus on the day ahead of you? Consider taking the time to create a growth strategy to help your business achieve its fullest potential.
Another key part of growing your business? Staying up-to-date on tax regulations, deadlines, and filing requirements. Check out ComplYant, so you can stress less about taxes and spend more time scaling your business.