This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Small-business owners may often be focused on how to grow their businesses. But growing profitably and financing your growth sensibly — whether through small-business loans, merchant financing, or equity financing — could pose a big challenge. Investing in your small business may be a viable option, but it could be important to approach business growth with serious planning, self-awareness, and the right type of funding.
Here are some business growth strategies for owners to consider, as well as ways to help strategically plan and invest for sustainable growth.
Understand Your Business and Goals
Before making decisions about how to pursue business growth, consider taking time to assess your company’s current operations, strengths, and opportunities. To help do that effectively, you can consider maintaining detailed accounting records, regularly assessing your competition, and setting clear goals for the direction in which you wish to take your business.
After you have an accurate understanding of your operations, strengths and opportunities, you may be ready to consider your business investment plan for growth.
Start With Knowing Yourself
Some of the best business growth plans can start with honestly understanding who you are and why you do what you do. What’s your value proposition? Why do you think customers choose you, and why do they actually choose you? The answers aren’t always the same. For example, you might think you’re competing on service, but customers may actually be choosing you due to price.
After you have an accurate understanding of your operations, strengths and opportunities, you may be ready to consider your business investment plan for growth.
What are your current strengths to build on? Who are your ideal customers? As objectively as possible, what are your weaknesses? If you’re having trouble meeting commitments to customers or don’t have strong processes to help support consistent delivery, now may be the time to try to fix that before you expand rapidly.
Who are your competitors? When they beat you, why did they win? Sometimes you can learn this indirectly, through social media comments or the anecdotal experiences of your sales team or retail staff. But you may also want to ask customers and non-customers directly.
Leverage Your Strengths
After some self-reflection, you may begin identifying promising business growth strategies by using your core competencies and resources effectively to help support growth potential.
For example, would a bigger retail space to house more products lead to a sales spike? How might a revamped, easier-to-navigate website affect sales? Try to avoid getting so focused on one idea that you don't consider others.
Or if you’ve profiled your ideal customer, you might think about additional services or products they might want or services that might add value to what they're already buying.
Perhaps you could identify an underserved market your competitors haven’t noticed. Maybe the best way to expand the business is through horizontal integration, which refers to purchasing a firm with complementary products or an adjacent service area. But first, you may need to consider whether you thoroughly understand the business, its finances, and culture.
You might also get ideas from similar companies that operate outside your town, region, or industry segment. How are they innovating to support business growth? Trade publications may help identify such innovators, who might be willing to offer advice if they aren’t direct competitors. They may also share pitfalls you can learn from.
You may also find product and service innovations in other industries and consider whether you might reimagine their ideas for your own products and services.
Execute Your Growth Plan Strategically
A clear, step-by-step implementation strategy could help support your business initiatives as they are implemented. If you’re investing in business growth and productivity, you may want to make sure those investments may be attributed to the proper plans.
Carefully Execute Your Business Growth Plan
Investing in business growth and productivity could require deliberate planning and execution. Once you’ve identified your best business growth opportunities, you may determine what you need to make them happen.
For example, your plans may require:
- New or improved processes
- Investments in technology or equipment
- Skills that must be built or acquired
- Metrics to track success
Find the Right Business Funding
Business expansion costs money. Expansion planning may be included in a business plan that you might take to potential investors, a business loan provider, or other financing sources.
Small and mid-sized businesses could require external capital to grow. Even if you intend to fund your own growth, you might want to create a business investment plan as if you had to convince a skeptical lender.
When it’s time to get outside funding, you may find multiple options to consider. The right business credit cards could offer short-term funding for new business growth opportunities. Other options include business loans, as well as lines of credit and peer-to-peer lending via online platforms.
Measuring and Adjusting Growth Strategies
Businesses grow at different rates, but tracking your efforts and results could prove key to planning. For example, you may choose to use metrics such as:
- Revenue growth rate
- Net profit margin
- Customer acquisition cost
- Customer lifetime value
- Customer retention rates
Whatever metrics you choose, you should consider consistently analyzing the results of your investments in business growth, as well as refining your strategies to help optimize business growth over time.
Photo: Getty Images
The material made available for you on this website is for informational purposes only and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
