Growing the business is “raison d’etre” (the reason for being) for just about every tech start-up and many SMEs.
There are essentially only 4 ways to grow your business which I refer to as growth pathways as they are the fundamental outcomes of all growth strategies and plans.
Here are the 4 pathways to growth:
Pathway # 1: Growing Your Overall Market
- Bringing more companies to use your product/service category
- Persuading those already active in your market to spend more and/or more often
- While it enables your company to grow, this pathway requires you to be vigilant in “listening” ie understanding where things are at in your industries/markets and staying ahead of small business trends.
- Growth through overall market growth doesn’t need to be a passive strategy. Cooperate with your competitors to gain mutual growth. Engage with industry bodies such as chambers of commerce as well as advocacy and lobby groups funded by your industry
Pathway #2: Increase your Market Share
- Capturing a great share of sales from your competitors within your addressable market
- Growing your market share implies your start-up or SME is doing something better than your competitors as your customers prefer you over the alternatives. Ideally, you should be delivering superior value to your business customers based on their requirements and preferences—other than low prices!
- You must grow your company’s capabilities to deliver and support the increased number of customers
- This pathway may require you to acquire more resources and/or incur more costs
Pathway #3: Extensions
- Undertaking new business endeavours based on identified market and customer opportunities
- The underlying concept is that the needs of
customers change and shift over time due to:
- The collective impact of exposure to new and better ways of doing things
- Their own internal changes
- Action to compete in their markets
- You must think beyond what your business is doing today or risk becoming obsolete
- To grow, companies need to listen to, act on and leverage the needs of their customers
- Be sure to accurately estimate the cost of entry for pursuing new and additional opportunities. Some critical questions to ask include:
- How much
effort is involved?
- What are your chances of winning?
- Can you reduce the cost of entry?
Pathway #4: Price Increases
- Raising prices so your overall revenue increases
- Avoid competing on price. Identify other ways to deliver value. Otherwise risk being caught in price wars with your competitors
- Consider rack pricing tiers (ie different offers at different prices) so your customers can select the price and level of delivery/quality that suits them
Take action now!
- Understand your start-up or SME’s growth. What pathway or pathways are you on?
- Understand your pricing. What impact will price increases have on revenues and profits?
- Spend a day with your team considering extension opportunities. Define your core competencies and consider whether your start-up or SME can create new offerings that use its capabilities in new ways.