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Growth is crucial to the long-term survival of a business. It helps to acquire assets, attract new talent and fund investments. It also drives business performance and profit.

Why is growth in business important?

There are many reasons growth can be good for business. For example, it may allow you to:

• take advantage of new opportunities
• expand your products or services
• attract more customers
• increase sales
• employ more staff

It may also help you to respond to market demand, increase your market share and capitalise on your growing brand. It often spurs innovation, helping you to differentiate in the market and stave off competition.

Growth can also boost your business' credibility, allow you to broaden your supply base and increase stability and profits. However, to be successful and sustainable, growth must be strategic and must happen for the right reasons.

You should examine carefully if your business is ready to achieve and sustain growth.

Reasons for business growth

Most businesses grow to become bigger, perhaps through increased sales or market share, but size isn't the only driver. Some businesses pursue growth for:

• greater sustainability or resilience in the market
• lower costs - due to economies of scale
• greater market dominance
• greater buying and bargaining power
• ability to mitigate commercial risks - eg through diversification
• ability to reduce the threat of competition
• ability to survive market fluctuations and downturns
• ability to attract the best talent and staff

Whatever the motivation is, a full evaluation of the advantages and disadvantages of growing your business is always advisable. 

Deciding how to grow

There is no one way to grow a business. You may want to expand your service area, form business partnerships, launch new products in existing markets, diversify your existing product line or explore other business growth strategies.

The prospect of growth is exciting, but it requires careful planning and preparation. Follow these tried and tested tips to help you prepare for business growth.

You can also get free advice and guidance from your local council to help you grow your business and scale up operations. To request 91香蕉黄色视频, or call the Go Succeed helpline on Tel 0800 027 0639.

There are many ways to grow a business. Which way you choose to expand largely depends on your ambition, your reasons for growth, and the opportunities and resources available. However, two crucial factors for choosing a growth strategy exist. They are:

• products - what you currently offer, and what you'd like to offer in the future
• markets - where you currently sell, and where you'd like to sell in the future

Based on these factors, strategic tools - such as the - suggest four main types of business growth strategies.

What are the four major growth strategies?

Four main strategies for growth, each with their own distinct benefits and risks, are:

• market penetration
• product development
• market development
• diversification

With a market penetration strategy, you try to sell more of the same things to the same market. The risks are usually low as you focus on capturing a bigger share of your current market with the products you already have.

With a product development strategy, you are introducing a new product into your existing market. You're effectively selling something different to the same customer, potentially encountering greater risks.

Another option is a market development strategy, where you try to sell an existing product in a brand new market. For example, you may want to segment your existing market or reposition your product in it, or target an entirely different geographical area.

Finally, with a diversification strategy, you are aiming to sell completely different goods or services to completely different customers. This is typically the riskiest of options - it requires both product and market development.

Other ways to grow your business

Every business is different. You may need to adapt some of the suggested strategies to suit your circumstances. For example, you may want to explore:

• acquisitions
• franchising
• strategic partnerships
• improving efficiency in your business

You may also want to construct your own unique combination of strategies.

The best approach will usually be the one that suits your overall strategic plan. Focus on finding an option that could yield the most results from the least amount of risk and effort.

Keep in mind that, to succeed, your growth strategy has to be deliberate. Success will require a great deal of research and planning - see tips to help you prepare for business growth.

You can also get free advice and guidance from your local council to help you grow your business and scale up operations. To request 91香蕉黄色视频,  or call the Go Succeed helpline on Tel 0800 027 0639.

Market penetration is one of the four main business growth strategies. It involves selling your existing products or services into your existing markets with the aim of increasing your market share. 

According to the , this growth strategy typically carries the least risk, especially in the early stages of starting a business.

Market penetration tactics

For an effective market penetration strategy, you must have a successful product and a detailed understanding of your market and competitors. Common tactics include:

• increasing the market share of current products
• increasing the usage by existing customers
• dominating growth markets
• driving out competitors from a saturated market

Different strategies can help you to increase the market share of existing products, including:

• price adjustments
• sale promotions
• targeted advertising
• opening of new distribution channels, such as online sales

You can also segment your customers to identify a new demographic for your product, eg a different age group. Businesses often rely on advertising and marketing to attract and sell to specific demographic groups in their markets.

If your market is saturated, you may need to find another approach to drive out competitors. For example, raising or lowering your prices and heavily promoting your products can help make the market unattractive or inaccessible to smaller competitors.

If you can compete on price and offering, you may look at ways of increasing usage by existing customers. For example, you can introduce loyalty schemes or add value to the existing product or service to encourage more frequent use.

How to measure market penetration

Market penetration is often expressed as a rate or a ratio that measures your product's performance against the total market. It also relates to the number of potential customers that buy your product instead of a competitor's product.

As a metric, market penetration is expressed as a percentage. You can calculate it by taking the current sale volume of your product and dividing it by the total sale volume of all similar products on the market. The result is then multiplied by 100 to move the decimal and create a percentage. As a formula, this looks like:

You should regularly monitor your market penetration to identify any upward or downward trends. The higher the market penetration rate, the more likely it is that your business will be considered a market leader in the industry. 

If market penetration isn't suitable for your product, service or business, you may want to consider other business growth strategies such as market development or diversification.

Product development strategy relies on developing new products or modifying existing products so they appear new, and offering those products to current or new markets. When executed successfully, it can lead to growth in sales and market share.

Typically, businesses may look at product development if they've run out of opportunities for growth with their current product or within their current markets.

Growth through product development

With product development, a business usually has one of three choices. You can:

• create an entirely new product
• evolve your existing product for its existing market
• enhance your existing product to introduce it to new markets

Steps to create a new product or enhance an existing one are likely to include detailed research and development, a full assessment of customer needs, product design and analysis, design documentation, prototyping and production.

Each company approaches its product development strategy differently. Some businesses outsource product development and buy-in another product to sell it under their own brand. Others acquire the rights to sell someone else's product or work with another business to jointly develop new products. 

The key to a successful new product development process is continuous research, as well as the ongoing assessment of customer needs.

Brand extension strategies

Brand extension, or brand stretching, is a useful tactic in product development. It involves using your established brand name for a new product or new product category.

You can extend your brand in many ways, including:

• offering the original product in a new form
• combining two well-known products into one
• applying the existing brand to a different product category
• creating complementary products

Brand extension is a popular strategy within product development because it is usually easier to achieve than creating entirely new products.

It allows you to leverage your reputation and popularity of an existing product to launch a new one. The costs are also generally lower than they would be for introducing a new product without any brand identity.

However, to work, the brand extension must provide a logical link between the original product and the new item. If there is a mismatch, or the new product creates a negative association, this can lead to brand dilution. Find tips on using and managing your brand.

Keep in mind that product development is only one of four key business growth strategies. Others include market penetration, market development and diversification.

Market development is a growth strategy that involves selling your existing products or services to a new group of customers. It begins with market research where you:

• carry out a segmentation analysis of your existing market
• shortlist those market segments which you feel you should pursue

A segment is simply a smaller sub-group of a larger population. To identify a target market segment, you should look at factors like:

• new geographical areas
• new demographic segments
• new customer needs
• customer preferences, interests and lifestyle

You may want to look at customers typically served by your competitors, or customers currently not served by anyone. 

Once you identify your target segment, you should create a promotional strategy and find ways to attract and sell to customers within it.

Common market development strategies

Key market development strategies you could consider include:

• pricing - you could implement competitive price structures with offers and discounts or, to command a higher price, provide a product with more value than the competitor's
• distribution - you could develop new channels to reach target customers, eg sell online if you currently only have a 'brick and mortar' shop
• branding - you could create a new brand for products aiming to reach a target market or a specific customer segment
• promotion - you could consider tailoring promotional messages to entice customers with offers, vouchers, loyalty schemes, etc
• sales - you could target a different demographic segment or type of customer to create new leads and opportunities
• product development - you could alter an existing product or develop a new one for the untapped market

See more on product development strategy.

As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. Think about how you can get your current customers to use your product in a new way. 

Market development vs market penetration

The key difference between market development and market penetration is that market development strives to increase market potential. It does this by expanding into untapped market segments. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already existing marketplace.

See more on market penetration strategy and other business growth strategies.

Diversification is a growth strategy that involves entering into a new market or industry - one that your business doesn't currently operate in - while also creating a new product for that new market.

Different types of diversification strategies

There are several different types of diversification:

Horizontal diversification

Horizontal diversification is when you acquire or develop new products or services that are complementary to your core business and appeal to your current customers. For example, an ice cream business adds a new type of confectionary into its product line. You may require new technology, skills or marketing approach to diversify in this way.

Concentric diversification

Concentric diversification involves adding new products that have technological or marketing synergies with existing product lines or industries, but appeal to new customers. For example, a PC manufacturer starts producing laptops. You may be able to leverage your existing technologies, equipment and marketing to diversify in this way.

Conglomerate diversification

Conglomerate diversification occurs when you add new products or services that are entirely different from and unrelated to your core business. For example, a film studio opening up an entertainment park. The risks are high, as this approach requires you not only to enter a new market, but also to sell to a new consumer base.

Vertical diversification

Vertical diversification or integration is when you expand in a backward or forward direction along the production chain of your product. In this approach, you may control more than one stage of the supply chain. For example, a film distributor produces its own content, or a technology manufacturer opens its own retail store.

Deciding how and when to diversify will require:

• detailed market research for the new product or service
• a full assessment of customer needs
• a clear product development strategy and market testing
• sales, marketing and supply chain operations able to cope with the added demands

See how to diversify your business.

Advantages and disadvantages of diversification

There are pros and cons to each of the different diversification strategies. A successful diversification can help you:

• increase sales and revenue
• grow market share
• find new revenue streams
• achieve higher margins compared to existing products
• limit the impact of changes in the market

On the other hand, diversification will incur development, sales and marketing costs. It will also require additional skills, management and operational resources. If these demands exceed the potential revenue and profit gains, diversification can put your business at risk. For example:

• diverting funds and resources into diversification may limit potential growth in core areas of your business
• lack of knowledge or expertise in the new industry or market may lead to costly delays or mistakes
• diversifying too quickly may cause you to lose track of or dilute your core products or services
• if you stretch your resources too widely, you may struggle to provide a consistent level of service, which can lead to dissatisfaction and customer losses

In general, diversifying with similar products or services and selling them to a familiar customer base is less risky than some other business growth strategies, such as creating a product for a completely new market.

Diversification can be a great way to maintain business stability. It allows you to hedge your bets and, if one of your markets or products fails, you have another to back you up until you recover.

Find tried and tested tips to help you prepare your business for growth.

As well as growing your business organically, you can also expand by joining forces with another business. While this can create problems around decision-making and possible management and staff issues, there can be clear advantages.

Benefits of business cooperation

Successful business cooperation can deliver:

• more resources
• sharing of the managerial load
• larger skills and talent base
• bigger pool of contacts
• increase in markets
• diversification and organic growth using increased resources
• reduced commercial risk

The right partner should complement your core brand and business development goals, so consider carefully the type of partnership you plan to pursue to ensure the best chances of success.

Partnerships and joint ventures

Joint ventures and partnerships can offer both partners significant benefits, including sharing experience, skills, people, equipment and customer bases. Through a partnership or a joint venture arrangement with a complementary, non-competitive business, you may be able to open new markets or improve your offer to existing ones. But it's important to choose your partner carefully.

An agreement or contract defining the terms of the partnership or joint venture is essential and further legal protection is advisable. See how to create a joint venture agreement.

Teaming up should be a win-win situation for both parties. Businesses involved with complementary activities or skills are usually the most appropriate candidates. For example, a group of sole traders - a carpenter, builder and gas installer/electrician - could form a company to:

• increase their credibility in the construction trade
• allow them to bid for larger contracts
• appeal to customers looking for a 'one-stop-shop' service

Find out more about joint ventures and business partnerships.

Mergers and acquisitions

Growth through acquisition or merger is a common tactic used to achieve diversification and market positioning. It can help:

• increase market share
• expand the workforce
• widen the existing service or product offering
• grow revenues
• achieve economies of scale
• reduce costs through shared budgets and greater purchasing power

However, combining two businesses can pose challenges that did not exist before, such as:

• maintaining a presence in multiple markets
• managing a complex product and services portfolio
• retaining a larger and more diverse customer base
• managing more people and operational complexity

Find out more about mergers and acquisitions.

Acquisition and merger may not be suitable business growth strategies for all businesses. They are more suited to established enterprises, as transactions may involve commercial lawyers and considerable legal work.

You should thoroughly plan, research your options and strategically pursue the right type of growth for your business. If you decide that growth through partnerships isn't the right fit for your business, you may want to grow your business organically.

This short video explains what you must consider as you prepare your business for growth. The tutorial tells you how to:

• carry out a business review - covering things like premises, location, equipment, staffing, current financial situation, staffing, customers, competitors, etc
• know if you are ready to grow - discussing some common business growth implications and suggesting how to avoid problems during business growth
• explore different ways to grow your business - eg through market penetration, market development or product development, or other business growth strategies
• put together some concrete goals - by planning strategically and preparing a business plan for growth

For quick takeaways from this video, see our tips to prepare your business for growth.

Sound financial planning is the foundation of any business growth strategy. Firstly, you should establish:

• how much investment you will need to fund the venture
• when you will need it
• when it will be available
• how soon you will be able to repay the capital

It's important to detail all the costs incurred in getting your growth option underway and compare them against the anticipated profits. You must be realistic and practical when setting business growth objectives.

Financial forecasts

A detailed cashflow forecast is essential, not least because outgoings are almost certainly going to rise sooner and faster than revenues. You must have enough money in the pot to keep the core business running. It's a good idea to build in some surplus too, since projects of this nature often run over.

As well as cashflow, you may need to draw up detailed forecasts regarding sales, working capital and sources of seed funding, or any subsequent funding. See how to tailor your business plan to secure funding.

Financial investment

Apart from bank finance, businesses looking for capital investment have three main sources:

• Equity finance is money invested in a business that is not directly repayable. It could be your own, most likely raised through remortgaging a property, or money from others taking a share in the ownership of the business. 
• Venture capital is also known as private equity finance. Unlike business angels, venture capitalists look to invest large sums of money in return for equity in (ie a share in the ownership of) your business. 
• Business angels are private investors taking a minority or majority stake in a business, often contributing valuable business experience in the form of advice and contacts.

There may also be some development or enterprise grants or loans available in your area.

Return on investment for growth

A common way of measuring the profitability of a business is by calculating the return on investment or ROI. This ratio tells you what percentage of return you can expect to get over a specified time. Many expanding businesses use three to five year timescales.

To determine your ROI, you should take the total investment figure, work out the increased sales for each year and the resulting net profit, and calculate that as a percentage of the investment.

For example, suppose a business wants to add a new product line. It will require an investment totalling 拢200,000 in development costs, plant, marketing and promotion. The new line should generate 拢400,000 in sales and 拢40,000 in net profit each year. The table below explains how to work out the growth ROI:

It's a good idea to test the ROI with a number of different sales figures. While you may think additional sales could reach 拢400,000 a year, a number of factors - such as development problems, delays or sales and marketing issues - may result in lower sales in the early stages. You may also wish to adjust your calculation to allow for annual inflation.

See also how to measure your financial performance.

Expanding your business and achieving sustainable growth is an exciting prospect. However, it requires careful planning and preparation to ensure success. Here, we offer some practical tips to help you to optimise your business' potential and prepare for growth.

Assess your current performance

Understanding the strengths and weaknesses of your business is necessary for growth. Analysing your business' performance will give you valuable insight to start planning your growth strategically. It will also enable you to seize the right opportunities and address any shortcomings going forward. See how to measure performance in business.

Set clear goals and strategies

To prepare your business for growth, it is essential to outline clear goals and develop strategies to achieve them. Take time to define desired outcomes, identify target markets, choose the right growth strategy and establish actionable plans to reach your objectives.

Consider your resources

Growth uses up a lot of time, money and talent. Operational issues can hinder progress, so decide early on how you will finance growth. Look at processes to streamline operations for efficiency, and invest in talent to ensure that you have the right staff to 91香蕉黄色视频 growth.

Embrace technology

Technology is critical to driving innovation and growth. Assess your current systems to identify areas where upgrades (such as new software, automation or data analytics) could make the greatest difference in terms of efficiencies, customer experience and decision-making. Find ways to use technology for better productivity in your business.

Explore strategic partnerships

Collaborating with the right partners can open doors to new markets, resources and expertise, and greater competitive advantage. To accelerate growth, seek partnerships that align with your growth plans, complement your offerings and combine complementary strengths for mutual benefit. Read more about business growth through partnerships.

Focus on customer experience

Take time to fully understand your customers' needs, preferences and pain points. Customer retention and loyalty are paramount to any scaling plans, so keep their satisfaction a priority as you prepare to grow. Tailor your products and manage your customer service to help drive growth and distinguish you from your competitors.

Stay agile

If you're planning to expand, but the market trends and customer preferences are changing rapidly, build strategic agility into your plans. Being agile while maintaining a growth mindset will help you overcome obstacles, build resilience and manage change.

Remember to stay proactive and strategic in your approach to preparing your business for growth. For more tips, see how to grow your business successfully.

Support to grow and scale

You can get free advice and guidance from your local council to help you grow your business and scale up operations. To request 91香蕉黄色视频,  or call the Go Succeed helpline on Tel 0800 027 0639.

This short video explains how to change the way your business operates to improve performance by focusing on personnel, infrastructure and strategy.