How To Create a Growth Strategy Plan for Your Business in 6 Steps
Updated June 24, 2022
Every business should have a growth strategy that keeps all organization members focused in the same direction and helps employees to make the best day-to-day decisions. Learning what goes into a growth strategy can help you create an effective one for your organization. In this article, we discuss what a growth strategy is, the types of growth strategies that exist and how to create a growth strategy for your business.
What is a growth strategy?
A growth strategy is a plan that establishes the long-term goals of your business and devises steps on how you want to reach them. Business growth strategies help an organization stay focused on what's important and lets everyone know what they are working toward. A business growth strategy is also essential for any business that has investors, as these investors want to see that there is a plan for the future of the company.
A growth strategy can be about increasing revenue, customers, site traffic, market share, physical locations and more. It also involves each department within your business, such as sales, marketing, product development and customer service.
Types of business growth strategies
The best growth strategy for your business depends on your specific goals and the current state of your business. The five major business growth strategies are:
Market penetration is a business growth strategy in which you attempt to gain a larger portion of the market share. This means selling to more people within your current audience. This is a common growth strategy and typically involves acts such as:
Increasing marketing efforts
Lowering the cost of a product
Trying new marketing channels
Market development is when you sell your products to a new market. For example, if you currently sell your product to women in their thirties, market development could consist of starting to sell your product to women in their forties. Pursuing a market development strategy involves changing your current marketing and sales tactics to appeal to both audiences without changing the product, and the goal is to reach a new audience without losing the current one.
Product development is changing your current product offerings to appeal more to your current audience. The goal of product development and expansion is to make more sales in your existing market, using what you know about your audience to either develop new products or improve your current ones.
Diversification is selling new products to a new audience. It is a combination of market development and product development that can yield great results, but moving into a new market and developing a new product both come with uncertainty. Diversification requires knowledge of the new audience along with the necessary resources to experiment with a new product.
An acquisition means purchasing another company to expand operations, take a bigger piece of the current market share or expand into another market. Purchasing another company is inherently an expensive endeavor, which is why larger businesses, rather than smaller businesses, typically use this strategy.this strategy.
How to create a business growth strategy
To create a growth strategy for your business, there are six steps you can follow:
1. Conduct research
Research your industry and the type of growth you might want to achieve. Try to figure out where your industry might head next by reviewing reliable projections from government institutions and industry organizations. Find ways to keep up with your competition by assessing their product offerings, marketing tactics and more.
2. Set goals
Creating a business growth strategy can be easier when you start from where you would like your business to end up in the distant future, so establish what the ultimate goal for this business is.
From there, move backward in time. Think about where you want to be in five, 10 and 20 years and how those goals can help you achieve your ultimate goal. For example, if you want to have 100,000 customers in 10 years, a good goal might be to have 50,000 customers in five years and 10,000 customers by the end of this year. Set as many goals as you can think of to give your business something to work toward in multiple areas.
Some types of goals you can set include:
Number of employees
Number of markets
3. Determine metrics
To track your goals, use relevant metrics to measure progress. As you define your goals, pick the metrics you'll use for each of them. For example, if your goal is to increase sales, then your metrics might be year-end sales or monthly average sales. After picking a metric, decide how to track this metric. If you need sales or accounting software to do this, for example, now is the time to get it.
It's also a good idea to break down larger goals into smaller ones. Write down the required steps to reach a major goal and make them into their own mini-goals. For instance, a goal of increased website traffic may have smaller goals of increasing content production and growing social media followers.
4. Assign tasks
After establishing goals, assign them to the correct team members. Determine which teams would best succeed at each goal based on their skills and overall purpose. For example, you might consider letting the marketing team monitor and work toward the marketing-related goals for the organization.
There are several benefits to delegating the job of monitoring goals and implementing solutions. One benefit is giving team members a sense of ownership over the goal and the direction of the business. Employees often feel more invested in a business when they are directly responsible for its growth.
Second, delegation helps to ensure the work is spread evenly. This allows each person to give more attention to their assigned goals. Finally, by delegating goal responsibility, you can better evaluate which of your employees are performing the best.
5. Run experiments
To achieve your growth goals, you need to find new ways to improve your business. This requires setting up experiments to achieve your goals.
Start by selecting one of the goals that you want to work on. From there, design a simple experiment, looking for a better way to do things. For example, if your goal is to increase your number of social media followers, you could run an experiment posting different types of content or at different hours of the day. Over time, you would get a sense of whether your new strategy or your old one resulted in more new followers.
Your experiments should be based on research and should remain within acceptable levels of risk. Plan out how to run the experiment, the needed metrics and the type of results you want in order to call it a success.
6. Analyze results
As you put your growth strategy into practice, regularly analyze your results. If you meet a goal, determine what went right to help you get there. If you did not meet a goal, determine what went wrong and think up possible solutions.
Remember to also review your short-term goals and experiments to make sure they continue to align with your long-term goals. Also, ask yourself if your long-term goals are still what you want and if they are realistic. If you need to change your long-term goals, your short-term goals need to shift as well.
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