19 ways to grow your small business

Ansoff's Matrix

Market Penetrations Strategy

In this strategy the market served and the products/services offered stay the same, the approach is to grow your market share

Opportunities here include:

• Increase usage by existing customers – How could they use more or purchase more frequently?
• Increased marketing efforts this can be online via social media, PPC, google ads and offline via networking.
• Offer discounts, bonus, special offers i.e BOGOF
• Free trials, allowing potential customers to try before they buy is a very successful way to build trust and confidence about making the right purchase.
• Customer referral schemes – creating incentives for existing customers to refer new customers
• Identify a sub niche in your current market and focus marketing efforts on them.

Risk: This is the lowest risk strategy, as the knowledge of the markets and products is high however the return may be modest compared to other options.

Cost: Relatively low cost, investments in marketing and sale incentives

Market Development Strategy

This strategy requires you to find or create new markets for your existing products/services or expand into new geographical areas.

Opportunities here include:

• New uses for your products. Customer surveys or follow up calls are a great way to find out how customers are actually using your products – you may be surprised by what they say which could spark new marketing ideas.

• Overseas markets that have similar market needs. The DTI may be able to support with international development. As a Marketing manager in a small flag manufacturing business we took advantage of a DTI funded mission to Oman, offering hand made applique flags, the quality of workmanship and materials, plus our long heritage of providing Royal Standards in the UK made the products very appealing to the middle eastern market. In response to the COVID crisis the DTI have launched a series of initiatives aimed at supporting consumer and retail businesses in entering international markets Consumer & Retail Opportunities (great.gov.uk)

• Collaboration with other businesses offers a significant opportunity here, who do you know who has access to other markets for your products, allowing other small businesses to offer to promote your products into a new market for you, but existing customers for them is a valuable route to new markets. Collaborations can range from introduction only through to distribution.

Explore your network to find who you already know or identify some business types that could be open to collaborate and open up the conversation.

Find out more about how to make collaboration work for you in this article Collaboration: The secret weapon for small business growth

• New demographic – if your current demographic is professional women, age 35 – 45, single with school age children  what other demographics may present a good market for your products, flex the age; empty nesters, retiree, gender etc. Why not check out who your competitors are targeting, how can you improve on their offer?

• Take your business online – if you are not online already with your products/ services – why not? The use of online purchasing has grown by 19% globally this year alone.

Risk: Low to Moderate risk assuming you have a good understanding of your product/service benefits the risks are in finding and engaging new markets. You also need to consider if you have the resources to expand without diluting your current business. Geographical expansion will most likely expose you to new competitors and international markets may have some social & cultural differences to consider. Selling products internationally

Cost: market research, marketing, translation (international expansion), regulatory compliance

Product Development

Using the base of your existing products to develop new products/services to sell into your current market.

Opportunities here include:

There are two options here to expand your product/service range - Make or Buy.

• Make – this involves new product development. Coming up with new ideas can be daunting however the majority of new ideas are simply variations on what already exists, i.e. combining two products into one, modifying or adapting. I cover a clever technique for coming up with new ideas in my article How to come up with new ideas - a simple way to boost creativity (thepositivepen.co.uk)

• Buy – what products could you buy in to complement your current range. Thinking again of collaboration, what else would customers look to you to supply? Review the enquiries you have received over the past 6-12months what were those potential customers looking for that you didn’t or couldn’t supply – are there new areas to explore?

• Low entry point products – Whilst an artist’s original painting may cost thousands and only be available once, the options of limited-edition prints, different sized prints, calendars, cards, mugs and postcards means that there is a price point suitable for anyone. If your main product is high value, high commitment what lower value product/service can you create that allows people to access what your do.

Risk: Moderate – product development resources and time to make new products, the potential to dilute your brand if new products aren’t

Cost – Potentially significant costs involved in development as well as manufacturing and increasing levels of stock.

Whilst the risk levels of Product Development and Market Development strategies are higher than in Market Penetration they do offer greater opportunity for return over the longer term. Market penetration can trigger your competitors to respond with similar activity with a risk that it becomes a race to the bottom on price.

Diversification

This strategy is based on offering new products into new markets, this is the most challenging strategy as you have the lowest levels of existing knowledge and experience in either products or market compared to the other strategies. However this strategy offer the greatest opportunity to expand your business’s reach and appeal, creating substantial new routes to sales and increased profit.

Opportunities here include:

• Backward Diversification – Involves offering related products from the preceding stage of your current offer, i.e. mortgage advisers starting to offer estate agency services.

• Forward Diversification – Involves offering related products or services that relate to a later stage than your current offer i.e. a garden designer offering landscaping or garden maintenance services.

As the products/services are related to the current business you benefit from some existing market knowledge,

• Full Diversification – involves offering a totally new product or service to an unknown market. It will also take considerable time to accomplish.

Merging or acquiring another company is the most common route for diversification for larger businesses enabling the addition of products/services plus trained and experienced staff. However managing a successful merger requires significant management skill to successfully integrate two different cultures.

For micro businesses opportunities here include

• Distribution or licensing agreements for new products/services
• Forming alliances to work together yet remaining as separate businesses i.e the garden designer and landscaper making a combined offer.

Risk – Highest level of risk as it can be similar to going back to the start with a new business yet can bring the highest rewards in growth.

Costs: significant, potential long term investment such as new staff, equipment or training/development of existing staff.

Moving Forward

Whilst every business is unique, these four options for growth remain consistent. The matrix offers a simple model to allow you to discuss different options as a team, considering risk however it is important to remember the model is only directional, and offers no insight into specific market conditions or competitive landscape. The choice and successful execution is down to you.

Janet Doran , works as a Strategic Business Coach across North Yorkshire, UK. enabling small business owners in creative and professional service industries to win in competitive markets.

Find out more at www.thepositivepen.co.uk or call 07505 120051

I post daily, information/inspiration for small business owners, on twitter @ thepositivepen

One of the key benefits business owners get from working with a coach is that ‘protected’ time to work on the business instead of it in. If you are thinking about working with a business coach please get in touch.