Growing your business.
The growth of your small or medium size business is an essential fuel to not only drive the success of your business but take it to the next level. In order to grow your business successfully, you must consider the following:
- Short term actions
- Corporate growth strategies
- Engines of growth
Engines of growth can help you grow your business sustainably and profitably.
|Existing||Market penetration||Product development|
Let’s assume you manufacture and sell mobile phones. You can consider taking the following actions:
|Short term actions||Increase prices by 10%
End of the week sale
|Engine of growth||Paid advertising|
|Corporate growth strategies||Product development: mobile phones
Market development: Rest of Africa
What are engines of growth?
“Engines of growth” is a term derived from Eric Ries, the author of “The Lean Startup”. Engines of growth are mechanism to grow your business in a sustainable way. Engines of growth should be simple. Figure out what will fuel the growth of your business. Should you spend money on advertising or not? Your marketing strategy should depend on your engine of growth.
Most businesses do not have a clear vision that encapsulates their growth strategy. As a result, they end up doing too many things that ultimately impacts their growth. To grow, large businesses usually undertake activities such as strategic acquisitions, business transformations, divesting non-core businesses and expanding their footprint by having operations in growing markets.
Paid engines of growth can accelerate the growth of your business. Using this approach, you acquire customers by investing in paid marketing and advertising. The profits generated from the paid sales and marketing are then reinvested to make as much profit from the marketing as soon as possible.
- You invest in paid marketing
- Acquire new customers
- Obtain a profit
- Generate cash
- Reinvest that money and generate a feedback
- Ensure that you have a good margin so that you can reinvest the proceeds
You can acquire more clients organically by leveraging content marketing material. You can use social media to grow your business organically. Relying on organic traffic is limited and could be slow. You can grow your business faster by using the paid approach.
Sticky engine of growth
With the sticky approach, you retain customers with a low acquisition rate. However, they keep coming back frequently. The approach can also be considered to be subscription-based growth. Companies such as Netflix, gyms or software as a service like MailChimp have used this method to grow their businesses. With this growth engine, customers pay a monthly fee. The cash flow should ideally be regular. The intention here is to not lose customers. You should keep acquiring customers. If you are retaining customers, you are going to get a lot of money from them in the long term.
Your customers are bringing in new customers and your business grows like it’s a virus. This can be by word of mouth. A good example is Zoom. Every business desires to have viral growth.
Key factors that could improves the growth prospects of businesses in South Africa include:
- Easier access to debt and grant finance
- Essentially banks, development finance organisations and other institutions should simplify their requirements for accessing finance
- Lower taxes for SMEs and simpler tax rules
- Reduced non-wages labour cost
- Flexible labor market regulations