Act Now to Maximize Profits in 2020

Most CEOs perform annual planning to grow their business and increase sales and profits, as well as, the value of their business. However, there are certain methods companies must use for implementing a growth strategy.

The method a company uses to expand its business is largely contingent upon its financial situation, the competition and specific goals of the CEO.

Market Penetration
One growth strategy in business is Market Penetration. A small to mid-size business uses a Market Penetration strategy when it decides to market existing products and services within the same market. 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. This requires a strong sales strategy and effective marketing.

Market Expansion
A Market Expansion growth strategy involves selling current products and services in new markets either in new industries or new geographic markets – or both. 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. A business may also use a Market Expansion strategy if it finds new uses for its product and services.

Product Expansion
A business may also expand its product line or add new features to increase its sales and profits. When companies employ a Product Expansion strategy they continue selling within the existing market. A Product Expansion growth strategy often works well when technology starts to change. A business may also be forced to add new products as older ones become obsolete.

Diversification
Growth strategies in business also include Diversification, where a company will sell new products to new markets. This type of strategy can be 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 like, need and purchase the new products.

Acquisition
The above strategies focus on organic growth, and most CEOs and business owners 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 business may also use this type of strategy to expand its product line and enter new markets, as well as, acquire needed talent and deeper management.

An Acquisition growth strategy can be risky, but not as risky as a Diversification strategy. One reason is that the products and market are already established. A company must know exactly what it wants to achieve when using an Acquisition strategy, mainly because of the 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. Contact Mark Hartsell, MBA, President of CEO Advisor, Inc. today at (949) 629-2950 or email MHartsell@CEOAdvisor.com for a free initial consultation.

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