Is your business relatively successful but static? Are you happy with your current profit margins? Then beware! Your competitors may be waiting in the wings ready to snatch your customers and business away from you. To stand still is to yell to your competitors to come and get you! It makes practical and economic sense to continuously improve and grow your business. Successful entrepreneurs relish the challenges that new opportunities can bring. So how do you intend to grow your business and stay ahead of the field?
The size and structure of your business, whether you provide a service or product, its current success and profitability, (or indeed whether operating at a loss), your access to finance, and so on will help determine your path for growth. Add to these factors your personality, drive, ambition, and business acumen and you will have a sense of the level of risk you are prepared to take.
Low-risk level – Selling your existing product or service to your current market and continuing to secure your place in the market while keeping ahead of the competition. This is viewed by many strategists and entrepreneurs to be the easiest and safest way to grow your business as it will take little in the way of new investment or time to research the marketplace. You might, for example, induce your customers to buy more products or services by offering discounts on bulk buying and providing loyalty bonuses.
High-risk level – Diversifying by introducing new products or services to a new market. Considered to be the most difficult of growth strategies, diversification will probably involve extensive research into a new market with which you will have little or no experience. You will require additional capital, time and resources which could result in massive losses if your new venture fails.
Varying risk levels – Adopting a growth strategy offering varying degrees of risk between the two ends of the scale. This could be modifying current products or services to sell to your already established loyal customer base or selling to an entirely new market. You could expand your customer base geographically. Or it might be that you have to relocate your business to capture new markets.
Are you the type of entrepreneur that would rather take the low-risk options to sustain steady growth? Or, are you a risk taker, eager to capitalise on your current success and seize new opportunities and the subsequent challenges? High-risk growth strategies can bring high rewards if successful. They can also lead to massive failure and loss. Whatever risk strategy you decide upon, don’t make rash judgements, assess each growth strategy thoroughly and plan strategically for success.