Growth Strategies to Maximize Profits in 2017

57676625 - touching growth sign on blue screenCEOs and business owners of small and mid-size companies must plan for the growth of their businesses to increase sales and profits and build value. There are strategies that companies use for implementing a growth plan. The strategy a company uses to expand its business is largely contingent upon its size, industry, financial situation, the competition and specific goals of the CEO, as well as other factors. The most common growth strategies in business include A) Market Penetration, B) Market Expansion, C) Product Expansion, D) Diversification and E) Acquisition. CEO Advisor, Inc. works directly with CEOs on creating and implementing the proper growth strategy for each of its clients.

Market Penetration
One growth strategy in business is market penetration. A small or mid-size business uses a Market Penetration strategy when it decides to market existing products and services within the same market or industry. The only way to grow using existing products and markets is to increase market share. Market share is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors. Gaining market share requires a strong, well-defined sales strategy, and CEO Advisor, Inc. specializes in formulating and implementing sales strategies for small and mid-size businesses.

Market Expansion

A Market Expansion growth strategy involves selling current products and services in new markets. There are several reasons why companies consider a Market Expansion strategy. First, the competition may be such that there is little room for growth within the current market. If a business does not find new markets for its products, it cannot grow or increase sales or profits – in fact, profits will decline over time. Additionally, a Market Expansion strategy is needed when a company serves small, niche markets or the growth of these markets stagnate. A small or mid-size business may also use a market expansion strategy if it finds new uses for its product and services.

Product Expansion
A business may also grow by expanding its products or services or by adding new features to increase its sales and profits. When small or mid-size companies employ a Product Expansion strategy they increase products or services, while continuing to sell within the existing market. A Product Expansion growth strategy often works well when technology is rapidly changing. A small or mid-size business may also be forced to add new products as older ones become obsolete.

Diversification
Growth strategies in business also include Diversification, where a small or mid-size company will sell new products to new markets. This type of strategy can be very risky and companies will need to plan carefully when using a Diversification growth strategy. Market research is essential because a company will need to determine if customers in the new market will potentially want, need and purchase the new products at profitable pricing and at sustainable and forecastable volumes.

Acquisition
The above strategies focus on organic growth, and most CEOs and business owners of small and mid-size companies focus solely on this strategy. Growth strategies in business can also include mergers and acquisitions. With Acquisitions, a company purchases another company, or purchases the assets of a company without taking on the liabilities to expand and grow. A small or mid-size business may also use this type of strategy to expand its product line, enter new markets and gain expertise and intellectual property.

An Acquisition growth strategy can be risky, but not as risky as a Diversification strategy. One reason is that the products and markets are already established with an acquisition. A company must know exactly what it wants to achieve when using an Acquisition strategy, mainly because of the time and investment required to implement it.

CEO Advisor, Inc. specializes in advising and implementing growth strategies to grow small and mid-size businesses to the next level. Call Mark Hartsell today at (949) 629-2520, text Mark at (714) 697-3370 or email MHartsell@CEOAdvisor.com to schedule a free initial consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *