Growing a Business
Growing a small business is a different type of activity than establishing it. Planning and preparing for growth involves elements that are much more dynamic than when you were just beginning your venture. It is important to implement growth activities at the right time and at the right pace for your business’ infrastructure to handle. The approach taken toward growth goals should be based on how the current status of operations relates to where you want the company to be within the next several years.
Often business owners only think about the external environment when they are thinking of how to grow (new markets to enter, the level of competition, regulatory environment, etc.), but it is also necessary to think about your internal business infrastructure (efficiency of operations, employee personalities and organizational culture, relationships with suppliers and distributors, etc.) and how well it will be able to handle change. For instance, if you want to expand by offering a new product line, do you have the manufacturing and distribution capacity to handle that? Can you afford to finance in-house infrastructure in order to handle the extra capacity? Is your staff composed of people who are resistant to change? Will they help you implement growth or will they resist it?
Below we provide some common principles for growing a small business as well as some popular ways businesses tend to expand. These tips will give you a framework for how to think about growing your business. There are also many tools, resources, and programs available to help you make the necessary determinations, develop effective plans, and take advantage of incentives offered by New Mexico programs. If you are experiencing difficulties getting a permit, license or any other issue with a state agency, please contact our Office of Business Advocacy. See the BRC Toolkit and the BRC Directory for more details.
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- Value proposition: As a business that is positioned for growth, you will already have a good sense of what your value proposition is. The value proposition is what makes you different from your competition. Why do customers buy from you? What part of your business has led you to the success you have already achieved and why? Having an explicit and clearly articulated value proposition will be a support factor during your growth phase.
- Back to the basics: When you first started your business, you were solving a specific problem in a market or for a specific customer. Did you deviate from this initial reason over the years? Are you still relevant to your initial customer? Who are your current customers? Clearly define and articulate your customer and focus on that during your growth period.
- Get people excited: Reach out to the public and promote your brand. Build excitement around what you are doing and get people talking. Use social media, email, and direct contact to begin and continue the conversation.
- Evaluate your competition: Observe the decisions others in your industry are making. What are their strong points? How are they doing things differently than you are? Do you see any trends that you are not currently participating in? Use the information you glean from your competition to inform your growth strategy.
- Strengths and weaknesses: While it is a good idea to take inventory of your strengths and weaknesses, focusing on your strengths during a growth period is likely to be more effective than trying to fix your weaknesses. Build your strategies to suit your strengths. Do they feed into your value proposition?
- Employees: Employees will also serve as a support system during a growth period. Make sure you have just enough staff to accomplish your goals and pay them well. Investing in them will make them want to invest in you. Giving them the opportunity to develop professionally through classes and trainings can also prove beneficial. You may refer to the sections on Workforce Development below for more information.
- Determining growth points: What aspects of your business bring in revenue? How can you build upon your past success with new ways of generating revenue? Beware of basing your new revenue streams on fads that have a limited market life (i.e. crocs). It will be an expensive mistake to invest in unsustainable products and services.
- Measure the effectiveness of change: Once you determine the areas for change, you will want to put indicators in place to measure the effectiveness of the changes. Knowing whether the changes you are making are doing you good or harm is better sooner rather than later. It is also a good idea to implement data tracking systems, such as point of sale systems (POS), that allow you to keep a detailed record of your inventory turnover, know when you should purchase more inventory, make checkout and pricing easier and more consistent, keep profiles of your customers, and generate reports in various categories of your inventory. There are many point of sale systems available for purchase. Refer to this ShopKeep Guide to Choosing a POS System for tips on making the right purchase for your buisness.
You can find more information online regarding business growth and you can also visit this SCORE website for a checklist on growing your business.
As stated previously, the decisions you make about how to grow your business will be based on the unique qualities of your business operations and offerings. However, we will highlight some common ways businesses increase their revenue streams. This list is adapted from the SBA’s Ideas for Growing Your Business article.
- Other markets: If you are at a point in your business where you have reached a high level of market penetration, you may be able to consider expanding into other markets. What other markets would benefit from using your product or service?
- Other products or services: Are you in a position to develop other products/services? Have you invested in R&D for the development of new offerings? If you are not currently in the position to have more offerings that would attract both new and current customers, it may be a good idea to think about investing for this opportunity.
- Diversify revenue streams: Some ways you can diversify your income is to offer products or services that complement your current offering. You may also be in a position to consider importing and/or exporting products. NMEDD's Office of International Trade can help you find potential markets and buyers. New Mexico has trade relationships with Mexico, China, and Israel.
- Licensing: If you have the type of product or service that can be licensed, you may want to consider licensing as a means of generating more revenue from royalty payments and licensing fees.
- Sell on the Internet: It may make sense for your business to sell products and services online. The majority of customers look for businesses through search engines, so even if you can’t sell from your website, you should have a strong online presence to bring customers into your store.
- Open more locations: If you have a physical retail operation and you have been doing well, there may be other locations where the market supports growth. Research zip code and purchase data in the areas you are considering and conduct some market research before replicating your concept.
- Franchising: If you have a proven business model, turning your business into a franchise may be a fruitful opportunity. This way, you will be generating revenue and expanding without having to manage the opening or operation of new locations. See the Franchising section for more information.
- Merge, acquire, or form an alliance with another business: If you are in the position to buy all or part of a similar or complementary business, this could be an attractive way for you to grow. You can also form strategic alliances with similar or complementary businesses and work together as partners to increase sales.
- Contracting with the government: If you have a product or service that would benefit a government agency, winning a government contract could be a great opportunity for your business. The SBA and Small Business Development Centers have all the resources needed to connect you to the right opportunity. To learn more about doing business with the State of New Mexico, visit the New Mexico State Purchasing Division.
SOURCES: 5 Essential Principles for Growing Your Small Business found in Fast Company and 7 Key Steps to a Growth Strategy that Works Immediately found in Entrepreneur.