Grow & Improve
Business Strategies to Fast Forward Growth
When choosing how to grow your business, it is important firstly to consider the level of risk that is acceptable to your business, and the timescales in which you want or need to deliver the growth.
Growth can be Organic – from within your business, or Inorganic – growth by forming a partnership , most typically through a merger or acquisition. Each approach has their own strategies.
Considerations for choosing the best and most appropriate strategy to follow include,
- Market opportunity – what is the opportunity for you to grow revenue in your target market
- Level of investment – how much time, money and resource do your need to invest to generate your desired growth – what is the anticipated return on your investment?
- Capability – do you have the necessary skills, resources and infrastructure to deliver the growth internally. If you have a capability gap – what is the best approach to filling it – build organically or obtain capability from external sources.
- Appetite for risk – how much risk are you willing to take to deliver the desired growth
Organic Growth
For organisations looking to grow organically, there are 4 strategies at your disposal.
The matrix below is based on work by a leading strategist, Isaac Ansoff, and his theory for growth is taught across the globe in business and marketing courses and is used by organisations large and small. According to Ansoff there are four standard approaches an organisation can apply to grow.
- Penetration – this means selling more of your existing products and services to more of your existing customers
- New product development – this means developing and selling new products and services to your existing customers
- New market entry – selling existing products into new markets – this could mean new territories (geographic expansion) or could be new customer segments
- And Finally, diversification – so this is where you develop a new product and go into a new market at the same time
As you move from Options 1 through 4 the level of risk, investment and time to market generally increases.
Ansoff’s Growth Strategy Matrix
Source: Adapted from Igor Ansoff Growth Matrix, first published in a Harvard Business Review article entitled “Strategies for Diversification.”
Inorganic Growth
An alternative approach is to consider Inorganic growth – that is to grow your business either via a merger with or acquisition of another organisation, which already has the expertise, infrastructure, resource, products or market penetration that your organisation lacks to deliver your desired growth.
When choosing this approach, some of the things you should consider include:
- Barriers to Market Entry – the market you are trying to enter has numerous barriers which are difficult to overcome, within the timescales you have set out for your growth and it makes better commercial sense to partner with a company already established in your target market
- Cost to build capability internally – the costs and timescales associated with building capability internally are far greater than cost of a potential merger or acquisitions
- Strategic fit – how good a strategic fit with your own organisation is the business you are looking to acquire or partner with? Its not just about products, infrastructure and markets – do not overlook company culture, brand values and market positioning. Strategically is the partner you are considering a good fit? If the answer is no, then you need to consider the level of risk to your brand, and the challenges you would need to overcome in respect of successfully integrating the two organisations and changing company culture.
Five activities which can help support your decision-making
- Review all available product, market and performance data
- Identify gaps – do you need to collect additional primary or secondary data
- SWOT and Capability Analysis
- Understand the cost implications of each strategy you are considering – time to payback, ROI
- Consider Risk, Culture and Brand
Remember, that growth is not just about adding revenue, but is generally also about driving a positive impact to your business bottom-line…. Don’t let this be you.
Source – FPC Resource Library
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