Key Takeaways
Business growth benefits all companies—not just struggling ones—by protecting against disruptions, retaining customers, and maintaining healthy cash flow.
Growth strategy differs from marketing strategy; it's a high-level approach spanning sales, finances, and operations across four types: market, development, product development, and diversification.
Effective growth plans combine quantitative and qualitative business evaluation with market research before committing resources to any target.
SMART goals with assigned tasks, owners, and deadlines transform broad growth targets into measurable, actionable roadmaps.
Consistent business growth is key to strong profits and long-term business success—but how exactly do you get it? Growth isn’t always linear, nor does it look the same for every business.
Below, we’ll break down why business growth matters, then share growth strategies you can use to get ahead.
What is business growth and why is it important?
Growth is the process of expanding or improving your operation. It can take a lot of different forms. Depending on your goals and where you’re starting from, growth might mean expanding your business’s physical footprint, growing your customer base, or diversifying your offerings—usually for the purpose of increasing your profits.
You may think business growth is only helpful when a) you’re struggling to make money or b) you have lofty goals to overtake your target market or triple your revenue. But what if you’re somewhere in the middle of the spectrum?
Say, for example, that you’re running a relatively stable business with happy customers and consistent profits. In that case, do you need to work on business growth, or can you put it on the back burner? The short answer is that it’s always a good time to focus on growth.
Every business—regardless of size, industry, or offerings—can benefit from prioritizing growth initiatives. Business growth is key to:
Staying on top of trends
Keeping customers satisfied
Acquiring new customers
Competing with other businesses
Maintaining healthy cash flow
Improving profits
Meeting long-term goals
Minimizing your financial losses
Protecting your business from economic disruptions
The good news, though, is that you don’t necessarily have to make major changes to your business direction or day-to-day operations to grow. You can set one smart goal at a time and go from there.
What are growth plans and growth strategies?
Most business growth doesn’t just happen—there’s action and strategy behind it. Whether you want to create a new product line or break into a different niche, you need a game plan. That’s where growth plans and growth strategies come into play.
Similar to a business plan, a growth plan is a one- to two-year roadmap that describes your overall growth goals, benchmarks, and how you’ll measure your success. Within your growth plan, you’ll outline your business growth strategy, which is the method you’ll use to reach your goals.
Though growth strategies can include marketing solutions, it’s important to note that a growth strategy isn’t the same as a marketing plan. Growth strategies are high-level tactics that usually pertain to multiple different areas of a business—from sales to finances—whereas marketing strategies only apply to a business’s marketing goals.
There are four main types of growth strategies:
Market: Market strategy means growing your business by winning over your current target market and target customers.
Development: Development means growing your operation by taking your current products or services to a new market.
Product development: Product development is about growing by creating new products or services for your current market.
Market penetration: Market penetration is when you set your sights on entering a new market to capture customers there.
Diversification: Diversification is a two-pronged approach to growth. You’re focused on expanding your offerings and looking into new markets.
How to create a business growth plan
Follow these six steps to get started:
1. Evaluate your business
It’s hard to grow your business if you don’t know where you’re starting from. Before you set goals, take time to gather some quantitative and qualitative data about your business finances, operations, products or services, customers, and employees. You can review your recent profit and loss statement, balance sheet, and cash flow statement; inventory data and sales reports; and customer reviews and employee turnover rates.
Consider your business’s strengths and accomplishments, as well as your problem areas. Understanding what works and what doesn’t is a good starting point for setting growth targets.
2. Pinpoint your growth targets
Once you have a better idea of where your business stands, consider your vision for the next two to 10 years. You may want to:
Expand your offerings
Open a new location
Target a new sector of customers
Increase your revenue
Update your image or branding
Tap into a new market
Purchase another business
Chances are your broad growth targets will encompass a few different areas of your operation. To increase your revenue, for example, you may have to adjust your pricing, products, sales tactics, or even your entire business model.
3. Conduct market research
Before you invest time and money into a particular growth target, it’s a good idea to suss out whether the market will support or hinder your growth. Imagine, for example, that you have an ecommerce company selling specialty baby clothes. If you want to start offering blankets and linens in addition to the clothes, you need to find out if your current customers would be interested in that, and if not, which demographics would.
To research industry trends, consumer attitudes, and competitors, you can:
Send out customer surveys
Read customer reviews
Review the latest industry or consumer reports
Conduct comparative pricing and product analyses
From there, you’ll have a better idea of whether or not you need to pivot or adjust your expectations for growth.
4. Align your growth target with a growth strategy
A growth strategy helps give shape and direction to your overarching growth goals. Once you’ve nailed down your growth target, see which of the four growth strategy categories it falls into. Keep in mind that some growth targets—like improving your profits or increasing your customer base—can correspond with any of the four general strategies, while others—like introducing a new service—have a specific correlation.
Here’s a chart to give you an idea:
Type of growth strategy | Growth targets | Possible growth tactics |
Market | • Grow customer base • Increase revenue or sales • Open a second location • Increase customer acquisition rate | • Adjust your pricing • Refine your marketing methods • Use referral incentives |
Development | • Tap into a new market or region • Expand customer base • Increase revenue or sales | • Form strategic partnerships with other businesses • Take advantage of word-of-mouth marketing |
Product development | • Create new products or services • Increase revenue or sales • Grow customer base • Increase employee headcount | • Create new offerings • Update your value prop • Run promotions |
Diversification | • Expand your offerings • Open a new location • Purchase another business • Increase employee headcount | • Leverage social media partnerships • Focus on organic growth strategies (e.g. SEO and content marketing) |
5. Create SMART goals and use a growth strategy template
Setting SMART goals—goals that are Specific, Measurable, Attainable, Realistic, and Time-Bound—is key to creating a realistic action plan and measuring your progress along the way. Considering your timeline, finances, and resources, write out a handful of goals.
If you want to open a second location within two years, for example, some of your goals might be to secure financing by a certain date, sign a lease by a certain date, finish onsite renovations by a certain date, and staff your location by a certain date. Once you outline your goals, list out the various tasks and resources each goal takes to accomplish, then work backward and give each task a specific timeline.
Use a growth strategy template
Writing out your growth plan can give you direction and clarity. Here’s a sample template you can use:
Overall growth goal: Explain your plan and vision.
Growth strategy: Which type of growth strategy will you use?
Resources required: Explain what you need in terms of funding, people, technology, tools, or supplies.
SMART growth goal #1: Explain your goal and timeline for achieving it, as well as the metrics you’ll use to measure progress.
Task | Person in charge | Due date | Notes/Resources needed |
What is the task? | Who’s responsible for executing it? | When does the task need to be completed? | What resources do you need to complete it? Are there any special considerations to take? |
SMART growth goal #2: Explain your goal and timeline for achieving it, as well as the metrics you’ll use to measure progress.
Task | Person in charge | Due date | Notes/Resources needed |
What is the task? | Who’s responsible for executing it? | When does the task need to be completed? | What resources do you need to complete it? Are there any special considerations to take? |
SMART growth goal #3: Explain your goal and timeline for achieving it, as well as the metrics you’ll use to measure progress.
Task | Person in charge | Due date | Notes/Resources needed |
What is the task? | Who’s responsible for executing it? | When does the task need to be completed? | What resources do you need to complete it? Are there any special considerations to take? |
6. Take action and assess
Once you’ve outlined your plan, it’s time to take action. You may need to let your employees in on your goals, assign people specific tasks, reach out to your business accountant, or adjust your operations processes.
From there, take time each month or quarter to assess what you’re doing and measure success. Check in with your employees, review progress on tasks, and update or adjust your budget. If your strategies aren’t working, don’t be afraid to change course. Growth is an ongoing endeavor that takes patience and experimentation.
Frequently Asked Questions
What are the best strategies for business growth?
There’s no one best strategy for business growth; every business owner needs a customizable strategy that accounts for their unique business model, current profit situation, decision-making tendencies, and goals. That said, the most effective way to grow your business comes down to two distinct but overlapping goals: improving your product/services and finding more customers. You might need to invest in product development to make your offerings more appealing and retain existing customers, or you might need to expand your reach to connect with the people who haven’t heard about your business yet. In most cases, you need to do both.
How do you measure the success of a business growth plan?
You measure the success of a business growth plan by how well you hit the milestones and growth objectives outlined in the plan. If you take the time to write goals with specific key performance indicators (KPIs), you’ll have a super easy way of assessing whether or not you met those metrics—and how you can adjust them going forward.
How often should a business growth plan be reviewed or updated?
You should review your business growth plan every year at minimum, and ideally every quarter. You’ll want to see whether or not you’re on track to reach your goals and which tweaks you need to make to your strategy (if any).
How do small businesses prioritize growth initiatives with limited resources?
If you’re a small business with limited resources, you can still prioritize growth opportunities. You just have to be a bit choosier about how you spend your time and money. Beefing up your marketing efforts is a relatively affordable way to make a big impact on your business growth, as is improving your customer experience and asking for referrals.
