One of the best definitions of startup businesses was coined by Paul Graham. He said that startups are companies designed to grow fast, and that’s the only characteristic that makes them different from other newly incorporated businesses.
Fast growth requires a clever growth strategy. Creating a viable strategy is not easy, but it is still the only way to avoid ending up in the 92% of startups that fail in the first three years of their existence.
That’s why I've taken the business lessons I've learned and made this step-by-step guide that will make growth planning much less complicated and successful.
Step 1: Company & Market Evaluation
Before you start with growth planning, you need to do a lot of homework. Read about new market trends and study growth plans of rival companies that turn out successful. Although each growth plan is company-specific and unique, you should make use of all and applicable ideas you find during this research.
Researching your own business history is also very important. Determine its strong and weak points and think about its future growth opportunities. These can include: widening targeted market, opening new stores, entering foreign markets, etc.
Step 2: Consumer Targeting
Company growth requires advanced customer targeting. Entrepreneurs need to know preferences of people who are interested in buying their products. One of the most important tasks is to construct an image of their ideal customer. This way, entrepreneurs will have much less trouble with later audience targeting and with adjusting their product to customer preferences.
Step 3: Choose Your Growth Strategy
There are many proven and effective growth strategies that can be chosen. This decision should depend on company’s business model and current market trends. Some of the commonly used strategies are:
- Market Penetration- it includes selling more current products to current customers. That’s why it is the strategy that comes with least amount of risk and it doesn’t require any additional investments. Of course this strategy is very limited and it brings capped gain.
- Market Development- this strategy involves selling your current product on the new market. It requires you to spread your business to different geographic locations or to start selling the product outside your ordinary sales circles.
- Alternative Channels- this is a very efficient strategy that increases brand popularity and boosts company’s growth. It involves finding new channels to sell products. Opening an e-commerce store and selling products online is a great example for implementation of ‘Alternative channels’ strategy.
- Product Development- this is a strategy that involves high investments. Entrepreneurs will need money for further product development and upgrades. Upgraded products can spark a lot of interest among current customer base, and attract more people to buy it.
- Launching New Product- creating new product from scratch is the most expensive growth strategy that can be applied, but it also has the largest potential when it comes to attracting new customers and making current ones more loyal.
Step 4: Writing Business Growth Plan
Growth plan’s content depends on the stage company is in and its primary business. On the other hand, there are also elements that each growth plan should contain, these are some of them:
- Development opportunities and their explanation;
- Required budget, divided into quarters
- Financial breakdown, which should include both internal and external capital and its accessibility;
- HR requirements for carrying out all planned activities.
Step 5: Growth Plan Implementation
Growth plan implementation is even more important than the plan itself. During this process entrepreneurs need to be very careful not to break any laws. That’s why they should seek legal advice whenever they are in doubt or can't figure out legal solutions themselves. Also they need to keep their data and digital assets secure.
Get Growing With Lasting Long-Term Profitability
Without an elaborate growth plan, company’s growth will be small and sporadic. This document is a foundation of future business growth and it should be written for each new fiscal year. Only companies that grow fast can be called ‘startups’, which means that this popular term is in direct correlation with growth strategies entrepreneurs implement on their business models.
I hope you enjoyed this article on the key steps needed in developing a long term growth strategy for your business.
Interested in reading more business growth strategy articles?
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