Business growth strategies you need to know about

The United Kingdom is very much a nation of entrepreneurs. According to recent government statistics, our small islands are home to at least 5.5 million businesses, mostly with just one person running the show. So, if you’re looking to strike out on your own, you’ll be in good company.

The first challenge is brainstorming enterprise ideas that are a perfect match for you, from hobbies that make money to low cost business ideas. But, once you’ve made your dream a reality and have got things up and running, the next challenge is to make your business grow.

It’s crucial to think about how to develop a business growth strategy, because it’s not just about boosting your revenues. It’s also about preventing your business from stagnating, shrinking or even folding.

Whatever kind of career you’re embarking on – whether you’re exploring business ideas from home or perhaps launching your own café or restaurant – this guide will give you the lowdown on the best growth strategies for business success. Let’s dive in.

The key benefits of a successful business growth strategy

We’ve touched on why every entrepreneur needs to think about growth strategies for business. Let’s now run through some of the specific benefits such strategies can bring.

Boosting your income

It doesn’t matter whether you’re starting your business for purely practical reasons, or you’re interested in creative ways to make money, with the aim of turning a deep-seated passion into a career path. The bottom line is that it has to generate enough of an income to turn a profit and remain viable.

The most important benefit of a solid business growth strategy is that it will increase your sales, boosting your revenues and your profits. 

Increase your brand visibility

Growing your sales will have the positive knock-on effect of making your brand more and more visible in the eyes of potential customers. That said, you may still want to think about how to advertise your business in the most effective way. 

In fact, as we’ll see in a moment, activities like posting on social media and paying for ads online are a key component of certain growth strategies for business.

Encourage innovation and upskilling

You may find that successfully implementing a business growth strategy will naturally spur you to innovate your offerings, investing your increased revenues in new products and services that cater to a widening pool of customers.

For example, if you’re running a food and drink business like a café or restaurant, your growth may well encourage you to increase the range of dishes you sell, expand into food delivery, hire more skilled and experienced staff, or even open another branch.

4 types of business growth 

When you’re planning how to start a business, it’s useful to be aware of the types of growth which businesses can experience. Let’s look at four key categories.

Organic

Often the earliest kind of growth a business experiences, organic growth is when an increase in revenue and market share is based on your current internal processes. It can happen without specific strategizing, purely as a result of your business existing over time.

This is in contrast to growth that derives from investing in external resources, such as paying for advertising or acquiring another business.

Organic growth can be fuelled by:

• Word-of-mouth recommendations, where customers speak positively about your business either in person to friends and family, or through online reviews and social media comments.

• Non-paid promotion, such as emailing out newsletters, offering discounts, and writing blog posts for websites and social media platforms which position your business as a leader in its sector.

As you’re not paying for short cuts, organic growth can be slow. On the plus side, that makes it a low-risk business growth strategy. So, if your budget is tight and the question currently uppermost on your mind is “how much does it cost to start a business?”, then organic growth should be your focus right now.

Another advantage of organic growth is that it can spur creative thinking, both in terms of your promotional content and the kinds of products and services you offer.

Strategic

While organic growth takes place “naturally” over time – say, as a result of word-of-mouth recommendations – strategic growth is always the result of a specific plan, and often requires spending money.

It can rely on strategies for business growth such as paying to have ads placed above organic search engine results, paying for social media visibility, and developing new products and services.

Strategic growth is very often the next step after your business enjoys some initial organic growth and you generate enough profit to allow you to invest in more aggressive strategies.

Internal

Internal growth comes from optimising how your business runs, for example by organising your staff and working practices so they operate in a more efficient way. This can be as simple as implementing new collaboration software like Slack or Microsoft Teams, so that colleagues can share information and carry out tasks without siloes developing.

You might also invest in new equipment which can automate certain internal processes, increasing your efficiency and allowing you to grow.

For example, if you’re running a physical shop, café, bar or restaurant, you could install Point of Sale Pro, an all-in-one tech solution for taking orders, managing stock and taking payments in a swift and seamless way.

Acquisition/merger

Perhaps the most abrupt and radical kind of growth comes through acquiring or merging with another business. This will immediately grow your team and business footprint, but at a potentially large financial cost. In other words, it’s a high risk but potentially high reward move. 

There are a number of reasons why a business may choose to go down the acquisition route. If, for example, you’re keen to break into another country’s marketplace, then acquiring a business already thriving in that territory is a far quicker approach than starting there from scratch and organically establishing your brand.

An acquisition or merger can also be an efficient approach if you want to acquire the skilled staff and resources to rapidly diversify your services. Say for example you’re exploring how to make money online and set up a social media marketing business.

By embarking on successful strategies for business growth, you might generate enough profit to expand your team and then consider branching out into new kinds of business, such as web development. (This is known as “related diversification”, which we’ll discuss in the next section.)

Acquiring another agency specialising in development means you’ll instantly have the experienced workforce to offer this service to your clients. You and your current team won’t have to go through the painstaking process of learning new skills yourselves.

Of course, this kind of business growth strategy will be a distant prospect for a startup entrepreneur, but it’s something to keep in mind and prepare for if you have ambitions to expand on a large scale.

Business growth strategy examples

We’ve taken a broad look at the ways in which a business can grow. Let’s now delve a little deeper into some specific growth strategies for business, and why they are typically implemented either on their own or in tandem with each other.

Market penetration

A market penetration growth strategy is all about selling more of the services and products your business currently offers, within the markets you’ve already been targeting. In other words, it doesn’t involve radically overhauling your business model, or your internal processes, so is a low risk strategy for growth.

Your focus is instead on making your brand more visible and ramping up customer numbers through savvy promotional activity. A marketing strategy for small business success can include:

• Social media marketing on sites like Instagram, LinkedIn, X, Facebook and TikTok.

• Forging partnerships with influencers.

• Providing discounts. 

• Paying to boost your search engine rankings.

• Allowing existing customers to purchase gift cards for their friends and family.

Market penetration activity can take two main forms: vertical and horizontal marketing.

Vertical marketing

A vertical marketing strategy involves promoting your business to a specific customer niche, or vertical, within a particular market. The vertical may be defined by parameters like age, income level, lifestyle, and geographical location.

Say you’re been pondering how to start a side hustle and want to follow your passion for fashion by reselling clothes online. While you may offer all kinds of clothes, you might decide to deploy a vertical marketing strategy emphasising retro clothing from the 60s and 70s.

This could involve writing social media posts about those decades, or perhaps making links with Instagram and TikTok influencers interested in those eras and offering discount codes to their followers – who will be people naturally interested in vintage fashion.

To take another example, you might launch a tech business which creates software for better workplace management. When working out how to identify your target market, you might select a specific business sector which would be a great fit for your product, such as law or healthcare.

You might alternatively decide to target potential clients by size rather than sector, with your promotional blogs and LinkedIn posts emphasising how your cost-effective, user-friendly software solution is ideal for very small businesses.

Since the focus of vertical marketing is narrow, it can be a more manageable and affordable strategy, well-suited to a business that has limited resources. Targeting specific verticals can also make your brand stand out more easily, spurring rapid growth.

Returning to our online store example above, by promoting a particular type of fashion category, rather than pushing yourself as an all-round clothes shop, you’ll be competing against fewer rivals in the eyes of potential customers.

Horizontal marketing

As you’ve probably guessed, horizontal marketing is a more generalised approach, where you promote your business to a diverse population of potential customers.

This broader approach can potentially open up more business opportunities, since you won’t be limiting yourself to a particular segment of the sector. If, say, you’ve set up a food business like a neighbourhood café or pizza takeaway outlet, you’ll probably want your marketing to reach people of all ages and interests.

Or, if you set up a new dating app which caters to all demographics (as opposed to, say, the LGBTQ+ community, or the over-50s), then a horizontal marketing strategy will be your natural go-to for growth.

Market development

Market development is a business growth strategy where you introduce your products and services to an entirely new market (which can be a new geographical location or population segment). 

The question of how to do market research for small business is fundamental to this approach, because you’ll need to have a good understanding of the new territory in order to promote your business properly.

For example, when brainstorming how to start a business from home, you might decide to start a graphic design agency catering to clients in the UK. As success builds, you may feel bold enough to enter the American market, advertising services to businesses in New York or Los Angeles.

This kind of major geographical expansion will require plenty of research into how the American market differs from Britain’s. You will certainly need to be aware of what kinds of design trends are currently popular among US businesses and who your competitors will be. The latter is important for determining how to price a service in this new territory.

Market development can be domestic as well as international. Let’s consider another example, such as opening a restaurant specialising in small plates dishes in London’s Hackney area. 

Thanks to the quality of your food, and savvy use of tech like Point of Sale Lite which makes it easy to take payments and track sales, your business thrives to the point where you’re ready to open a new place in another city. This is where the market development strategy comes into play.

You’ll need to research what other kinds of restaurants exist in the new location, what kinds of prices they charge, and whether a menu suited to the hip foodies of Hackney will appeal to the new customer base in another town or city. It may well be that you have to overhaul the menu to fit local tastes.

Physical expansion into a new market is a relatively high risk strategy because of the investment required, so it’s vital to do your due diligence and research as deeply as possible before making that leap.

Product development

As the name suggests, this business growth strategy involves changing your services or products while remaining within the existing market sector.

For some businesses, this may be a simple matter of tweaking things day by day. For example, if you run a food truck selling Mexican street food, you might change up your taco recipes to excite your customers, which will require simply buying different ingredients and trial-running recipes.

For other types of businesses, it may require more substantial research and development (R&D). For example, if you’re running an online store and you’re thinking of things to make and sell, you may have to undertake significant research into current market tastes, what the overheads for new products will be, and whether you have a good chance of turning a healthy profit.

Product development strategies for business growth can include:

• Making alterations to your existing portfolio of services, or existing product line.

• Creating new, premium versions of existing services and products, which are offered at a higher price.

• Developing and introducing entirely new products and services.

During the R&D phase, you might find it useful to read social media posts and Trustpilot and Google Reviews to know what people are looking for. You can also reach out to existing customers, sending out email surveys to gauge what they think of your offerings and what new items or services they might appreciate.

As well as providing you with valuable feedback, this can also make them feel more valued and connected with your brand, aiding in customer retention.

Diversification

This business growth strategy is very similar to the product development strategy, except that it also involves branching out into a new market, where a new potential customer base and new competitors await. The difference between these growth models can be illustrated with the following example. 

Say an entrepreneur has been exploring small business ideas and, being a keen baker, decides to set up a gourmet brownie company offering a selection of four different flavours. Over time, she decides to remove some flavours and introduce other ones, perhaps with some bold twists like adding bacon. This would be product development.

However, if she decides to start selling very different food items, such as jarred pickles and chutneys, through the same online store, this would be an example of “related diversification”. In other words, she’s created a new product within the same overall market sector (food), thereby catering to a new customer base and competing with new rivals.

Cut to a year later, and the business is doing so well that the entrepreneur feels ready to branch out further. Her new idea is to offer a subscription service dispatching monthly batches of carefully selected cosmetics to customers. This would be an example of “unrelated diversification”, since she’s entering an entirely different sector altogether.

How to develop a business growth strategy

Before embarking on any business growth strategy, you should take the time to sit down and plan your next steps in a methodical way. It’s the same approach as when you’re thinking about how to write a business plan.

There are two time-honoured strategy models that can help you refine your thinking: the Ansoff matrix and the SWOT analysis. Let’s consider them in turn.

What is the Ansoff matrix?

Don’t be daunted by the question of how to plan your business growth strategy. This is where the Ansoff matrix can come in very handy.

Named for its creator, the mathematician and strategic management pioneer Harry Igor Ansoff, it provides a clear framework for organising your thoughts regarding business growth, so you can weigh up pros and cons of different approaches and make a sound judgement on how to proceed.

The Ansoff matrix consists of a simple 2x2 grid – you can simply sketch it on paper if it’s just you brainstorming ways to, say, grow one of your passive income ideas. Or, if you’re presenting the matrix to your staff, you might want to create it using a programme like PowerPoint, using colours to distinguish the quadrants of the grid.

The x-axis, which is the horizontal axis at the bottom of your matrix, is labelled “Products” (and/or services). The first half of this axis is sub-labelled “Existing” and the second half is sub-labelled “New”.

The vertical y-axis is labelled “Markets”, with the lower half being sub-labelled “Existing” and the upper half sub-labelled “New”.

Now you can label the four quadrants of the grid with the names of growth strategies for business, as follows:

By populating the Ansoff matrix with your ideas for each quadrant, you can evaluate the viability of various strategies, and make a considered decision on which one(s) to implement.

What is a SWOT analysis?

Once you’ve decided on your marketing strategy, you can further assess the best way to roll it out – and potential pitfalls you might face – by undertaking a SWOT analysis for small business growth.

As with the Ansoff matrix, it’s a very simple 2x2 grid template which you can simply sketch it out with a pen and paper, or create on your computer. The word “SWOT” is an acronym based on the four quadrants of the grid. Namely, “Strengths”, “Weaknesses”, “Opportunities” and “Threats”.

Strengths and Weaknesses

The upper left quadrant of your analysis grid is headed “Strengths”, and is where you’ll list the inherent plus points of your business growth strategy. These are the advantages your idea has, regardless of any external factors.

For example, if you’re plotting a market development strategy to sell a product or service in France, and you or a member of your team is fluent in French, that would count as a strength.

Meanwhile, in the upper right “Weaknesses” quadrant, you list the inherent drawbacks of your chosen marketing growth strategy.

If, for example, a recent attempt to raise capital through small business crowdfunding brought in less money than you’d hoped, thereby restricting how much you can spend on advertising your brand in a new territory, this could undercut your market development strategy.

Opportunities and Threats

The lower left quadrant of your SWOT analysis is where you’ll list the “Opportunities” – that is to say, the external factors which can help make your business growth strategy a success. 

For example, if the territory you’re targeting with your diversification strategy currently lacks well-established businesses offering your intended product, this lack of strong competition can spell opportunity for you.

Meanwhile, the “Threats” quadrant in the lower right of your grid refers to outside factors which can potentially hold back your growth strategy. For example, if there are legal hurdles to jump in order to undertake your plan – say, government regulations regarding food preparation – these count as threats.

How growth strategies for business can affect your legal structure

One of the legal requirements for starting a small business which every entrepreneur must satisfy is deciding on which business structure to adopt. This will determine how much tax you pay, what kinds of records you keep, what your financial liabilities are, and how much paperwork you’ll need to stay on top of in order to meet government regulations.

When embarking on a business growth strategy later on, you may find it makes sense to alter the structure to fit the evolving shape of your enterprise. Before discussing this, let’s recap the three main business structures that you can adopt, whether you’re exploring online business ideas or you’re meeting customers and clients in person. Sole trader

This is the simplest business structure, and means there is no legal separation between you and your business. It requires minimal paperwork, with the main specification being that you have to register with HMRC for submitting tax returns and paying any taxes you owe on your revenues.

As you and your business are legally the same entity, you’re able to keep any money made from the business (tax aside). But you’ll also be personally liable for any losses or debts your business incurs.

Partnership

This structure involves two or more people running a business together. As with the sole trader structure, there’s no need to formally register the business or do much in the way of paperwork besides registering for tax. However, as well as filing their personal tax returns, the business owners must ensure a separate tax return is submitted for the business.

The partners are liable for losses and debts, and will need to draw up an agreement detailing the money they invest in the business and how profits will be divided.

Limited company

Setting up a limited company is the third main option for entrepreneurs, and it is the most complex of the lot. There’s more paperwork involved because you’re creating a business as a separate legal entity. This means registering with Companies House and abiding by accounting requirements.

Your business will also need to pay Corporation Tax on profits, while you will be paid your earnings via a salary and dividends based on your shares in the company. A key advantage of having a limited company is that you won’t be personally liable for its losses and debts.

The impact of your business growth strategy

Of these three structures, you’ll initially pick one which best suits the needs of your business at conception. For example, you may not need to go down the more complex limited company route when exploring small-scale business ideas with low investment, such as freelance copywriting, selling bespoke stationery, or doing repair and maintenance jobs.

That’s because such businesses won’t incur high overheads or put you at high risk of incurring business debts, so the hassle-free simplicity of the sole trader structure will probably outweigh the extra protections brought by the limited company structure.

But let’s say your business grows and you want to embark on a market development strategy to take your brand overseas. You might team up with someone who has the business know-how to do this, so it might make sense to transition away from being a sole trader and adopt the partnership structure.

Or, say you’re eyeing an ambitious diversification plan with a hot new product line in the works, and want to raise money from investors. You may have to adopt the limited company structure in order to create shares which you can then give investors in return for their cash injection.

Becoming a limited company can also be a canny move when embarking on strategies for business growth which are higher risk (i.e., all of them except market penetration strategies), since this business structure will insulate you from the impact of debts.

However you decide to proceed, make sure you follow the official guidelines on adhering to the obligations of each structure. These are laid out on the British government’s site for setting up a business.

General tips for deploying your business growth strategy

We’ve delved into the best business growth strategies, how these different approaches work, what each one may entail, and how you should plan your next moves. Now, here are some general tips to bear in mind if you’re considering taking what may be the most consequential step since setting up your business in the first place.

Take stock of your current situation

Given the challenges which come with even the very best business growth strategies, it’s important to be absolutely sure you’re in a good position to make your plans a reality. Take stock of where your business is right now, and ask some key questions:

• How am I coping with the workload as it currently is?

• Is the business meeting its current targets?

• Do I have the capacity and resources to undertake a growth strategy?

• Do I have the financial resources to invest in R&D, staffing, advertising, legal fees, and other business growth expenses?

By honestly answering these questions, you’ll know if the time is right to take your business to the next level.

Set business growth goals

It’s important to know what the ideal objective of your business growth strategy is, and to have milestones to aim for.

Say you’re looking to double your revenues over the course of a year through a market penetration strategy. You might want to set out target percentage revenue increases per quarter, based on what you feel your strategy can realistically achieve.

This way, if you miss these targets over the first few quarters, it’ll be a sign that your strategy needs to be overhauled. You could set similar goals for a market development strategy, aiming for example to have 20% of total orders at your online store to come from the new target territory within 12 months.

Remember to maintain excellent customer service

The last thing you want is to stretch your resources so thin while growing your business that customer service suffers. Remember to make time to engage with customers using the channels that make the most sense for your business.

Email marketing for small business success can include sending questionnaires on how your customer base feels about your changes, and what they would like to see. Engaging via social media is another great way to chart reactions to your growth strategies.

Optimise your growth with technology

It’s good to know there’s a wealth of user-friendly tech tools, both in the form of software and hardware, which can make life for you and your staff easier, and encourage business growth.

These include: 

• Card readers and Tap to Pay on iPhone tech allowing customers to pay you without needing to have cash to hand.

• Point of Sale Pro interfaces for keeping sales and stock-taking seamless in hospitality and retail settings.

• Software for automating invoices and ensuring you always accurately calculate what you’re owed.