8 Business Growth Strategies for Small Businesses
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Small businesses don’t necessarily grow all at once, and if you're just starting a business, it can be hard to see growth in its very early stages. Just like we use many measures to show a person’s growth—in height, weight, age, and accomplishments—we evaluate business growth using a variety of factors too. Similarly, small business growth can be measured with a whole host of metrics.
From external factors, like customer demand and sales trends, to internal measures like financial records, employee headcount, and company culture, there are many ways to measure small business growth. And each of these measurements will provide a unique snapshot of one aspect of your business. Together, these business growth indicators provide a composite view of how your company is doing and where it’s projected to go.
We've compiled a guide to the ins and outs of the eight best small business growth strategies and the indicators to look at to measure your small business growth too.
What is small business growth?
First, the basics: What is small business growth, exactly? Beyond the general concept of expansion, there's no solid, objective answer to this. Because small business growth is such a broad concept, it's hard to land on an exact business growth definition. For this very reason, most of the industry will actually look to numbers to define small business growth.
Those numbers can serve as an indicator of growth, hence why they're called growth indicators. The lack of an exact definition of small business growth is why business growth indicators are so important: You'll only really be able to know whether or not your small business is growing if you look to the concrete numbers.
Using these business growth indicator numbers can also be useful when setting goals for your business growth strategies as well. Setting specific numeric goals can be a great indicator of how well your business growth strategies are or aren't working.
If you've examined your growth indicators and have decided your business needs to grow, or if you're just looking to boost your business growth a bit, here are six business growth strategies you can use.
8 small business growth strategies to move the needle
Here are eight business growth strategies to try and implement for your business. Depending on your existing business, you may decide some of these are more important than others. Take a look at them all and decide where your business could best benefit from putting one or two into play. Remember to track your growth indicators before you implement these, and then check in after a set period of time to see how they're working.
1. Increase demand through strategic partnerships
Strategic partnerships can really be anything your business needs them to be, from something as minor as another company mentioning yours in a blog post, to something as major as offer an integrated product. Strategic partnerships will open up your small business to your partner's audience.
You've seen other brands do this, so think of the best strategic partnerships you've interacted with and apply what worked there to your own business growth strategy. This could be teaming up with a similar company to promote one another's goods or services to increase brand exposure.
2. Remove unprofitable products and services
Improve your profit by removing unprofitable products and services. Run an analysis of the costs and revenues of each individual product or service your small business offers. If a given product or service isn't turning a profit, then it's time to seriously reconsider: You'll want to either diminish the costs involved in providing this product or service or even stop offering it altogether.
You've probably noticed that some of the goods or services you offer severely underperform, but you can definitely also do an analysis to find the worst-performing options. Once you do this, don't be afraid to take those options off the table in an effort to cut costs.
3. Improve your conversion rate
Rev up revenue by improving your conversion rate. Only a portion of the audience that your small business gets in front of every day ends up converting. In other words, only a certain number of people who actually are exposed to your business actually end up reaching the end goal, likely making a purchase or spending money. Calculating the conversion rate can be done simply by taking the number of people who convert and dividing it by the total number of visitors or people who are exposed to your business.
It probably comes as no surprise then that a crucial part of small business growth in revenue is improving your business's conversion rate. To improve this number, take the total number of visitors to your business website and the total number of people who buy, sign up for an email, or meet your goal, and use those two numbers to calculate the conversion rate. Turn to tried-and-true lead generation tactics like performing A/B tests and setting up clear, concise calls to action.
4. Create a sales funnel
Increase sales by creating a sales funnel. To grow your business's sales, we suggest you set up a codified sales funnel. Delineating the steps that each customer has to take before buying your product or service can help you identify drop-off and success. With this insight, you'll be able to see and improve the stages at which most customers decide not to convert.
By creating a clear funnel your customers will have an idea of where they are in the process of working with you as a business, and you might be able to reduce some confusion and friction around making a sale.
5. Revamp your recruiting tactics
Another one of our business growth strategies is to fortify your workforce with new recruiting tactics. If you're eager to measure your small business growth based on your number of employees, then it's time to start getting creative with how you approach recruiting. To ramp up your business's workforce, you need to harness creative ways to find employees beyond sharing the job descriptions on LinkedIn. Always carry your business card with you, and don't be afraid to recruit at any given moment.
Remember that this isn't just about filling seats and getting people through the door though. You want the right people working for you who share your passion for your business and are going to help you with your business growth goals.
6. Improve customer relationship management
Shore up market share with a customer relationship management system. Market share is far from static. And if you're going to use this stat to measure your small business growth, then you need to make sure you're maintaining the customer base you already have, even as you grow. Setting up CRM systems will help ensure your hold on your market share, even as you expand beyond your core customer base.
A customer relationship management system can help you stay on top of customer relationships. They can send out birthday emails with discounts, thank you emails for customers who have hit an anniversary with your business, and you can even use it to get feedback from your most loyal customers if you want.
7. Stay aware of your competition
Knowing who your competitors are and how they're growing and diversifying is important if you hope to stay ahead and become or remain a leader in your industry. Be sure to visit your competition's websites frequently and research their ad campaigns, landing pages, and social media presence to stay aware of new trends and strategies. You may be able to build on successful marketing strategies and even learn from plans that fail.
8. Expand your business portfolio
Another tip for managing your competition could be buying out or acquiring emerging companies or struggling companies with a significant online presence. If you're losing sales to competitors looking to leave the industries, you may be able to scale up even faster by purchasing them.
For instance, instead of spending hundreds of thousands of dollars to develop an information base and content plan to help educate your clients, you might be able to purchase a competitor who already has this information available that your company can use and promote with little new investment.
How to accurately estimate growth
Now that we've gone over the business growth strategies, we should also cover how to measure that growth, which you'll want to do before and after you implement the strategies so you can track how well they're working.
That’s where KPIs, or key performance indicators, come into play—they’re specific, measurable values that indicate how well, or poorly, your business is achieving its goals. By honing in on your business’s KPIs, you can more effectively track each quarter, and chart your progress using consistent metrics.
Your business’s KPIs are dependent upon your company’s specific goals, and you should set several KPIs for all aspects of your business—like sales, marketing, and finances. To give you a clearer picture of what we mean, though, here are some common KPI examples:
New accounts created
Deals finalized by your sales team
New customers per month
Organic search traffic
Ultimately, your profits and losses alone can’t tell the whole story—keeping track of targets specific to your industry and business helps contextualize your growth.
And don’t base your growth projections on inference alone. If you or someone on your team has accounting experience, this is the perfect time to flex your analyst muscles. Depending on your purposes for evaluating your company’s growth, consulting a professional might be a worthwhile investment. That’s especially true if you’re presenting this information to lenders or potential investors.
In addition, tracking KPIs on a monthly and quarterly basis will help you identify where you’re growing, and any areas that need work, in addition to creating a consistent reporting structure. There are many quantifiable indicators of growth worth evaluating, even though they don’t correlate directly to profit and revenue, like social media engagement, website traffic, and search rankings. The most relevant indicators of growth will vary depending on what kind of business you own, so take the time to assess which factors are the most crucial to your success.
Once you establish your growth priorities and KPIs, you'll be able to apply these growth indicators to your business:
Demand: Assessing your business’s demand is crucial if you’re thinking about expanding your business or making a hiring plan.
Profit and losses: To determine your business’s profits and losses, you’ll need to collect a few crucial financial records, including income statements, a cash flow statement, and your balance sheet.
Revenue: Revenue can help indicate growth, even if your profits aren’t increasing at the moment.
Sales: Your sales team is the frontline of your business, and you have insights into the trends and changes from month to month that will impact revenue, so it’s worth aligning your company’s KPIs with sales goals.
Workforce and network health: From headcount to hiring patterns to vendor relations, your employees and partners determine a large part of your success as a manager and owner.
Market share: Depending on your industry and geographical location, your portion of the local market could be an additional key indicator of how much your company has grown, and how much growth potential there is in the existing market.
The bottom line
A comprehensive assessment of your business, from day-to-day operations to annual revenue, should indicate to you how much your business is growing over time, and help you identify patterns in demand and spending. Try to capitalize on what’s going well, while working on areas that could use improvement. These factors are all easier to pinpoint when taken into consideration with financial data and your company KPIs.
If you see indicators of business growth, act quickly to capitalize on that growth. Look into small business financing to seize potential opportunities, while eliminating inhibiting factors, like bad hires and unnecessary spending. Once you’ve done your homework, and developed an idea of how your business is changing and growing, you can draw from countless free tools to help grow your small business.
This article originally appeared on JustBusiness, a subsidiary of NerdWallet.