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July 28, 2013

Business Cents: Develop growth strategies for your small business

TERRE HAUTE — Taking a small business and growing it is never an easy task. When a small business is started, it’s wise for the business owners to develop a business plan so that they understand how to launch the company and what type of capital they will need to invest in a variety of company aspects. Research states that one-tenth of 1 percent of businesses reach $250 million in revenue; most businesses that start small stay small.

Developing and growing a business is truly up to the owner of the company and their goals and ambitions. The definition of success varies across the board for small business owners. One business owner may define success as having a few employees who are paid well and having a substantial market share in their local market.

Another business owner may define success by national or regional market share or by having 200 employees. Listed below are a series of steps to get you started in developing your own business growth strategy.

1. Market penetration: This is typically viewed as least risky since market penetration simply involves selling more of your product or service. For example, consider toilet paper. When you go to purchase toilet paper, look and see how many four-roll packs are still on the shelf. Although there are a few still available, the vast majority of suppliers like Charmin and Angel Soft offer 12-roll packs that are vastly more popular for the consumer.

2. Market development: The next point to consider is how to sell more of your product or service in the adjacent market. Is your company one that sustains a franchising model? If you look across the Wabash Valley, think about how many of our businesses are actually franchises. Chick-fil-A, McDonald’s, Snap-On Tools, Aaron’s Rental, Servpro, Liberty Tax Service and Anytime Fitness are just a few of the franchises in our area, and all are basically locally owned and operated.

3. Alternative channels: E-commerce comes into play here. How many different ways can your customers reach you and purchase your products or services?

4. Product development: Your existing customers are a great target for this strategy, as selling a new product or service to them is far less risky than having to embark on selling a new product into a new market at the same time.

5. New products for new customers: Often this is dictated by the market demand and that new products must be created for new customers. Polaris started out with just snow mobiles but realized it need all-terrain four-wheelers also. Of course, we can’t forget all the smart phones like Blackberries and iPhones.

Developing your company’s growth strategy always begins with determining your own goals, especially since your personal goals need to align or compliment your company goals. And don’t forget to truly reflect on what you consider success for you and your business.

Heather (Penney) Strohm is the regional director for Indiana State University’s Indiana Small Business Development Center.

 

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