What Is Business Growth? (Definition, Strategies and Steps)
Updated May 26, 2023
Developing a business growth plan can help you identify and implement strategies to boost revenue, expand your customer base or create new products. Knowing what a business growth plan is and the best practices for creating one can help you successfully grow a company. It can also help you create more effective plans to motivate teams and encourage goal-setting practices.
In this article, we discuss business growth strategies and offer tips on how to create an effective business growth plan.
What is business growth?
Business growth is expanding a business to generate additional profits. A business can grow in one or more areas to achieve this expansion. Some common areas of business growth include:
Sales and marketing
Many companies use business growth plans when planning for future expansions. A business growth plan is a thorough framework that includes objectives, strategies and plans for achieving business growth goals. Usually, these plans span a year or two. They can help business development managers, company executives and other stakeholders implement growth strategies and measure success. Assessing growth metrics allows the company to adjust the approach as needed to meet the overall goal established in the growth plan.
Strategies for business growth
You can use a variety of strategies to help you create your own business growth plan, depending on your goals and the methods you want to use to meet them. A few of the most common types of business growth strategies include:
Market development strategy
A market development strategy focuses on increasing growth by assessing and updating your marketing efforts to target new demographics. Using this strategy, you identify new markets to target through advertising and marketing. For example, a marketing department may create targeted advertisements for a new geographic location to reach a wider audience.
Product development strategy
A product development strategy involves creating new products or services to serve your current target market. Rather than trying to reach new customers, your focus is on developing new items for your current customers to increase sales and continue to grow.
For example, a home decor company may create a new line of candles to expand its product offerings. Sometimes, companies may decide to modify existing products to make them appear to be new or upgraded offerings. This may include changing the labeling, packaging or appearance of the product.
Read more: What Is Product Development Strategy?
Diversification is a combination of market and product development strategies. When diversifying, instead of focusing on a single endeavor, you consider new products and services you might offer to new markets. For example, a health food store may develop a line of organic skincare products to reach a new market.
Another example is a fitness store that solely offers home fitness equipment that decides to offer athletic shoes and workout clothing lines as well. This diversification can lead to far more sales from current home fitness equipment customers. In this case, the fitness store offers items that keep its current customers coming back on a regular basis. Before this diversification, the current customers were purchasing home fitness equipment that didn't need replacement on a short-term ongoing basis, as athletic shoes and workout clothes do.
Market penetration strategy
A market penetration strategy aims to increase a company's market share by encouraging customers to purchase its products or services. Often, this strategy involves enhancing marketing strategies or offering discounts to attract new customers.
For example, a technology company may lower the cost of its software to expand its customer base, which can increase its market share. Also, if a company currently only sells to the domestic market, it may decide to expand sales to an international market as well. On a smaller level, a brick-and-mortar business may add a website to generate online sales as well.
How to develop a business growth plan
Follow these guidelines to create an effective business growth plan for an organization:
1. Define your goals
Begin your growth plan by determining what you hope to achieve by the end of the plan. Usually, this means establishing what type of growth strategy you plan to pursue. Think about what method is most cost-effective and achievable for an organization, and consider which one may cause the greatest possible growth. Use the SMART method to create a realistic, measurable goal. This acronym stands for:
Specific: Make your goal as specific as possible to help you determine the growth you want to achieve. For example, rather than setting a goal to increase sales, you may create a goal to increase sales by 5%.
Measurable: Make sure you can measure your goal to determine your progress. For example, you may have a goal to gain at least 3% more customers each month, which allows employees to understand how their participation matters.
Achievable: Adjust your expectations and make sure your goal is achievable. Review your current metrics and data to help you set a goal the organization can meet with hard work since a goal that's too difficult can lower motivation and a goal that's too easy can create boredom.
Relevant: Ensure the growth goal you set is relevant to your long-term organizational goals. For example, if you're hoping to build an international customer base, set a goal that focuses on increasing the organization's total number of markets.
Time-bound: Set a deadline for assessing your progress so you can help the team track and progress goals effectively. Make sure you can meet the rest of your SMART criteria within your established time frame.
2. Determine your metrics
Establish how you plan to measure success. Consider the type of strategy you're pursuing to help you determine relevant metrics to evaluate. For example, if you're using a market development strategy, you may choose to monitor social media impressions within a certain time frame to assess your progress. If you're using a product development strategy, you might compare the cost of research, development and production to sales of the new product or service. The goal is for the future sales of the new product or service to outweigh the costs associated with the final research, development and production costs.
3. Consider your timeline
Set a timeline for your growth. Use the deadline you've established in your SMART goal to set short-term benchmarks along the way. These benchmarks can help you continue progressing to meet your growth goal. Short-term benchmarks are easier for your team to hit than setting one long-term goal.
When working towards a short-term benchmark, the team may feel more pressure to continually work towards the goal instead of feeling that there's still time to hit the long-term goal before they push to meet it. Trying to hit a long-term goal without a short-term benchmark can slow progress or cause a team to cut themselves too short as a long-term goal date draws near. For example, if you want to create a new product for the organization, a short-term goal may be to develop a prototype within six months.
4. Create a plan
Use your short-term benchmarks to create an effective action plan for yourself and other growth plan stakeholders and participants. The action steps you identify may depend on the type of plan you're implementing, the length of time it may take to achieve your goals and the resources you can use to meet your objectives. For each step, identify the person responsible for completing the action to ensure everyone understands their requirements and expectations. A well-organized plan can help a company succeed in achieving its goals.
5. Meet with stakeholders
Share your plan with internal and external stakeholders. Seek input from internal stakeholders, such as other managers or team members, to improve the action steps of the plan. Ask external stakeholders, like investors, if they have any additional guidance or requests for the plan. Getting feedback from others can help you consider additional ideas and viewpoints. Use this collective feedback to help you adjust the plan before distributing it widely.
6. Implement and adjust
Once all stakeholders have reviewed and approved the plan, implement the action steps. Make sure to assess the plan regularly to ensure you're progressing as expected to meet your growth goal. Consider a monthly or quarterly check-in to adjust the plan as needed. After achieving a short-term goal or benchmark, celebrate the success as a team to keep everyone motivated to continue working toward the larger goal.
Tips for creating an effective business growth plan
Use these tips to help you create a comprehensive and actionable business growth plan for an organization:
Know the company's strengths
Ensure your growth strategy aligns with areas in which the company excels. Use these talents to help you identify areas where the company can grow organically.
Make your next growth plan
Before you reach the end of your current growth strategy, begin brainstorming what your next growth goal might be. Make sure you're consistently working toward a growth objective.
Review other plans
You can often gain insights from other businesses to help you develop a growth strategy. Search for other companies' growth plans so you can determine what templates you might consider and other details you can use for your own goals.
Use your team
Make sure you have skilled team members who can help you develop and implement a business growth plan. Seek their input to help you identify areas where you can improve the plan to achieve success by scheduling a regular meeting with the team to discuss new ideas, concerns and growth success.
In some cases, you might require additional capital to reach your growth goals. You can use a business growth plan both to satisfy current investors and to seek more money from new investors.
Include marketing in your plan
No matter which growth business plan you select, marketing can be a valuable part of that plan. Make sure you include marketing employees in the growth plan so they can contribute their skills and expertise.
Consult with your network
Consult with peers in your professional network who have implemented business growth plans in the past. Ask them about their experiences to help you gain additional insights into your own plan by networking with them regularly.
You can purchase software programs designed specifically to help you write a thorough business growth plan. If you're not sure what to include in your plan to meet your goals, business growth software might help.
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