By Ashley Hindsman.
Running a business is exciting, especially as it begins to grow. There are currently more than 907,000 small and medium companies in Malaysia across all sectors, and a lot of these have seen growth in the first quarter of 2018 alone. For example, retail sectors have grown by 7.6% from January. However, without robust strategic planning in place, potential for any business growth and future success could be uncontrolled, or worse still, it may stall altogether.
Putting in place a comprehensive business management plan will help you to prepare for increased growth in a way that is manageable and sustainable. Whether you are at the start of your entrepreneurial journey or you already run an established business, a business strategy is essential for any long-term success.
What is a business growth strategy?
A business growth strategy is a plan of action for your business expansion, which details what your business goals are (e.g. profitability, retention rates, efficiency) and how you plan to achieve them. If you don’t research, develop and then execute a growth strategy, it’s tough to know where you are going and very difficult to develop and achieve progress. Not only will your business not reach its goals if none have been defined, but you’ll also fail to meet any personal goals as an entrepreneur.
Having a well-thought-out business strategy will aid business development. It can increase your turnover and maximize your market opportunities. But, at the heart of your business strategy, you need to be realistic about what you can achieve with your resources and the growth opportunities your market has to offer.
There are different types of growth strategy you can pursue depending on what stage your business is at and to help you decide what is achievable within your own business. Find out what each entails below:
Market penetration strategies are used to drive business growth in preexisting markets. They should aim to achieve the following :
Increase share of the market with existing products.
Encourage growth in a saturated market by driving competition.
Get customers to use a product or service more frequently.
Market expansion is an ideal strategy if you feel your current market and customers have been maximized and you need to engage with new potential consumers. The main goals of expansion are:
Sell more existing products by identifying new markets to expand into.
Increase sales to first-time buyers.
Identify new markets of channels to expand into. For example, overseas or online markets.
Selling new products, updated versions of existing products or extensions of existing products.
Product expansion is best suited for businesses who have market research which they can transform into a new product or service or help develop their existing ones. Methods of expanding in new ways, may be:
Penetration of new markets by remarketing products to a new audience. For example, Avon’s Skin So Soft lotion became very popular as an insect repellent, so Avon started marketing it to campers and people who spend lots of time outdoors.
Exporting a product and launching it in foreign markets –There was RM935.39 billion worth of exported products from Malaysia in 2017.
Diversifying a product offering by advertising new uses, variations, other products with the same branding.
Using licensing agreements to expand your product through other companies.
Growth acquisition should be used in a situation where it is best for a business to take over the operations of an existing organization, than to set up its own. The benefits of this approach are :
It can boost market share and drive out the competition.
It can reduce costs or bring about economies of scale.
It is a potential way to break into an existing market in another country.
Limited but ongoing investment in marketing and sales.
Limited business development but keeps market share steady.
Improving your sales strategy
There are plenty of things that can be done to improve your sales strategy even if you have a limited budget.
Identify your customer –who are they, what do they need, where will you find them and how will you reach them?
Identify the problem or need and how your product or service solves that.
Define what makes you different – why should a customer buy a product or service from you and not a competitor? What will they get from you which they won’t get from someone else?
Make the most of social media – Social media is a fantastic way to connect with potential customers across Malaysia, and it is either free or relatively low cost. By building relationships with your customers through Twitter, Facebook and Instagram for example, you can generate more leads, increase the different channels through which you can reach your customers, and reduce the cost of customer acquisition.
The benefits of sales forecasting
A sales forecast will provide you with a good idea of what your business will look like in the next few months. Using current and past data, it should give you an idea of what your cash flow will be and how much inventory you need to buy. Having a sense of future revenue also allows you to plan and budget for different expenses and to expand or launch at just the right time, so to avoid any risk.
Sales forecast example template
A sales forecast template is an invaluable tool for the whole business to refer to when making key decisions. The below gives some tips before you start :
A sales forecast should show a year of sales month by month and then by year for the next two to five years.
If you have more than one product or service, you can include them separately and add them up. However, if you have lots of products you may want to consolidate and summarize them for this purpose as it’s a forecast and not an accountancy exercise.
Use past data if you have it. If you’re already selling your product, you can use it to make an educated guess as to what you want to achieve over the next 12 months.
If you have no past data or it’s an entirely new product, look at similar products or services to give you an idea of how sales might look.
Include the cost of sales, i.e. the amount it costs to buy what you sell. For example, if you sell clothes in store, it will be the cost you buy them in at
Using a CRM to improve business strategies
In today’s digital world, using an intelligent Customer Relationship Management (CRM) software isn’t an optional extra, it’s an essential part of the overall sales and marketing strategy. A CRM can automate many key processes and streamline the entire sales cycle.
There are a few ways a CRM can make your business activities more effective :
Stores customer data securely and electronically.
Collates data on buying patterns and sales which can then be used to see what works and what doesn’t, allowing you to optimize your sales strategy.
Allows you to keep track of your sales funnel and to create activity reports.
A CRM can help you to segment data and target people much more specifically based on the information you hold.
Many processes can be automated and targeted through CRMs. For example, sending newsletters to the right audience, creating automatic special offers when people sign up to a website and reminders to contact people within the sales pipeline, so leads don’t get forgotten.