5 Big Business Growth Strategies Small Business Can Use
Eventually you want your small business to grow into a big business, right? If that's true, then why not look at the growth strategies of big businesses and see what could work for you?
With that in mind, here are five big business growth strategies that small businesses should think about using. Not every strategy will be perfect for your situation, of course, but take a look at each of them and think about which ones offer an opportunity for your business.
1. Market Segmentation
If you're not familiar with the term, market segmentation simply means picking a sub-set of the entire marketplace that you organize your efforts around. In other words, out of all the people in the world, which ones are you going to try to sell to.
Most big businesses are excellent at market segmentation. They carve out their corner of the market and then they do everything they can to own that space.
Red Bull is an example. They do everything they can to get their energy drinks in front of a young, adventurous, and thrill-seeking crowd. That's their segment of the market. Ever wonder why Red Bull owns a Formula One racing team? That’s why.
Pepsi is another example. Pepsi was losing its battle with Coca-Cola to become the heavyweight cola company. Instead of trying to beat Coke at their own game, Pepsi decided to focus on the young, fun-loving demographic. To this day, many Pepsi commercials still show younger music stars, celebrities, or other young status symbols.
In other words, Pepsi decided to forget about the 30 and over crowd and segment their market. Coke is still the top dog, of course, but thanks partially to market segmentation Pepsi has built a very successful brand as well.
Most small business owners would be very happy with building the next Pepsi, but many of them are afraid to eliminate part of their potential market. It can seem scary, but you need to focus on your core customer if you want a clear path to growth.
Segmenting your market simply comes down to making choices. Who are you going to serve? Who are you going to avoid? Furthermore, which segment can you focus on to improve profitability?
2. Leveraging Partnerships
Some small business owners love to complain about how they can't compete with the vendor relationships that the big guys enjoy. There is some truth to the fact that you can't "pay to play" like the Fortune 500s—but you can leverage partnerships in a very savvy way.
For example, let's say your small business makes tennis balls and you have some technology that makes the balls bounce better and last longer. So you have a great product, but you don't have a manufacturing facility, a distribution channel, or any of the other pieces of the tennis ball supply chain. All you have are great tennis balls.
You may not be able to compete with the big industry players (Wilson, Penn, Prince, etc.) for sponsorships or tournament partnerships, but you could partner with a tennis ball factory and a distribution company. In fact, you could partner with them without having to pay a cent for your own factory or distribution. Just pay your partners a portion of the profit every time you sell a tennis ball.
The result? You negotiate for mainstream production and distribution without paying the huge upfront cost of building a plant or hiring a shipping company. Now you can set your focus on selling tennis balls instead of worrying about making them.
Big businesses can pay for partnerships up front, small businesses need to negotiate for partnerships that pay per sale.
3. Use Checklists
Big businesses have massive facilities, complex supply chains, and large pieces of equipment. Managing the day-to-day operations in these environments is too complex for one person. Furthermore, there are too many variables to keep track of and people will often forget something unless they have a checklist to keep them on track.
Small businesses are the same way. Small business owners have to wear many hats. If you don't keep yourself accountable and remind yourself to do something that "brings home the bacon" ... then it's easy to get caught up doing things that aren't essential. In the rush of a normal day, it's also easy to forget to do a critical task.
Take a page from big business and develop process lists or checklists for specific tasks and jobs. Give yourself a guide to success and a reminder to do the essentials each day.
Perhaps the number one way that most big businesses continue to grow is through acquisitions. Before you think I'm off my rocker by suggesting this move for small businesses, let's explain a few things.
First, acquisitions are tough. You can easily break the bank with one bad purchase. That said, acquisitions can be a massive source of profit and growth if you make a few key moves.
You will know what's a good buy in your industry much better than I will, but the one thing I will say is that you need to follow tip #3 above and stick to a specific list of characteristics that you're looking for. Don't let emotion or ego play a role in a major purchase. Stick to the checklist.
Secondly, do you have the budget to buy up everyone in the industry? Probably not. I'm not suggesting that you buy something you can't afford. That said, there are a lot of businesses out there that you can afford and that you can probably improve. Don't dismiss acquisitions just because you're small.
5. Become a Leader in the Industry
Big businesses often make their name by leading an industry. They make moves when other businesses sit by the wayside.
I was recently talking with the employees of a large distribution company that wants to do business in China. There's just one problem.
The distribution company ships products for other companies and those businesses don't trust the distribution in China just yet. As a result, they aren't selling in that region. For the distribution company that means there are no products to ship, so they don't set up distribution. It becomes a chicken or the egg type of problem where neither side wants to move first.
So what does this company do? They say, "You know what? We know you don't like the distribution there, so we're going to go in and fix it. Then you can come and give us all of your business in China."
Is it a bold move? Yes.
Is it an expensive move? Yes.
Is anyone else currently doing it? No.
Does that mean that there is a huge opportunity for growth? Yes.
What's the lesson for small businesses? Don't be afraid to solve the hard problems that everyone else avoids. There is a lot of money to be made when you're the first person to fix something.