5 Business Growth Strategies for Expanding Your Company

Sometimes, business growth happens on its own—through customers telling their friends about a great product, or a particularly witty brand video going viral on social media.

This kind of accidental growth isn’t always guaranteed, though, so if you’re feeling ready to grow your business operations, it’s important to have a plan in place.

In this guide, we’ll cover:

• The key elements of business growth
• How to prepare for business growth
• 5 business growth strategies
• Types of business growth

We’ll also look at real-world examples of business strategies for growth and cover who you can turn to for help in improving your own business growth.

The key elements of business growth

When a business grows, they’ll experience impacts in many different areas—typically, across the entire operation. These impacts can be both positive and negative.

• Revenue, sales, and profits will ideally increase as the result of one or more business growth strategies
• Company valuation may increase to the point at which the business can acquire another company (or be viewed as a great acquisition)
• Access to talent and talent needs will change as a company grows—they may move from working with independent professionals on an occasional basis to regular contracts or hiring someone full-time
• Number of customers may grow if a strategy is executed successfully
• Share of market can expand either vertically or horizontally
• Geographic presence may change through acquisition, construction, or a partnership

You may see each of these elements evolve differently based on where your company started, the kind of growth you’re trying to achieve, and the business growth strategy you opt for.

How to prepare for business growth

Before selecting and executing a business growth strategy, it’s important that your business have a good handle on its:

• Brand and messaging
• Current customer demographics and market segmentation
• Existing share of the market
• Personas related to any new target markets and potential customers
• Short-term and long-term growth goals
• Cost to produce a new product line or enter a new market

Getting the help of a branding specialist, marketing consultant, or market researcher to iron out these details can be useful before starting on a growth strategy.

5 business growth strategies

Business growth often happens as the result of one or more strategies, including:

1. Market penetration
2. Market development
3. Product development
4. Diversification
5. Acquisition

Choosing the best growth strategy for your company depends on your market, product or service, type of customer (business or consumer), and industry.

1. Market penetration

Market penetration is the process of making your product the most widely available and appealing option in your current market.

When implementing this strategy, you aren’t necessarily increasing the number of different products you offer. Instead, you’re getting your existing products or services in front of more people while offering a better value proposition.

To penetrate the market, you’ll first need to expand your product reach. This process might include seeking out new retail partnerships, building stores in new areas, or buying out a competitor with a sizable market share.

As a result, market penetration can lead to increased sales because the product is now in front of new customers, or, in the case of a buyout, replacing competitors in existing markets.

When telecom company T-Mobile merged with rival Sprint, they essentially eliminated a third of their competition in the market and became the third-largest cell phone carrier in the U.S.

What impacts—and is impacted by—a market penetration strategy?

• Revenue, sales and profits
• Number of customers
• Share of market
• Geographic presence

2. Market development

Pursuing a market development strategy means that a business is expanding its footprint through geographic expansion or the creation of products and services that are complementary to current offerings.

Rather than focusing on product expansion in an existing market, as with market penetration, companies engaging a market development strategy will want to think of another offering that:

• Is something their existing target customer segments are likely to adopt
• Ideally uses some of the same core components, infrastructure, or resources
• Is not yet restricted by another company’s domination in the market
• Is located in a geographic area not yet serviced by a primary competitor

Amazon practiced market development when they rolled out PrimeRx^TM, a program that lets Amazon Prime customers search for the cheapest price on prescription drugs and get medicine through Amazon or a local pharmacy.

The e-commerce giant was an established player in the sale of technology, sure, and even the production of new TV shows—but not a name in medicine and pharmacy care. By leveraging their existing customer base and shipping infrastructure, the company created yet another way to satisfy current users and bring in new ones.

What impacts—and is impacted by—a market development strategy?

• Revenue, sales, and profits
• Access to talent
• Share of market
• Geographic presence

3. Product development

In order to achieve growth through product development, a company needs to either enhance existing products or create a new offering for their customers.

Product development could look like any of the following scenarios:

• Making minimal yet impactful changes to a product and only selling that new version going forward
• Releasing a second edition of a product and selling it alongside the original, at a premium
• White labeling a different popular or essential product (such as bandages or tissues) and selling it for less under a store brand name
• Creating an entirely new product, different from any current offerings, and selling it to a customer base
• Buying another company that sells a complementary product to your own, then integrating the new product into your business

Casper, a direct-to-consumer mattress company, saw success with the product development model. The company started selling a single mattress that would be shipped to customers’ homes. Eventually, they expanded into a line of adjustable and modular bed frames.

These bed frames were different from the company’s original mattress line, but appealed to their customer—someone who orders a mattress through the mail and is likely in need of an easy-to-assemble, shippable bed frame as well.

What impacts—and is impacted by—a product development strategy?

• Revenue, sales, and profits
• Access to talent

4. Diversification

Sometimes, product development overlaps with diversification—but there are four components to this type of business growth strategy. A business using the diversification strategy may opt for any of the following four approaches:

1. Horizontal diversification

When implementing horizontal diversification strategies, companies find ways to expand into new markets that are connected to their existing operations.

A good example of horizontal diversification is when Comcast (a U.S. telecom company that provides phone, internet, and cable access through its Xfinity service) purchased NBCUniversal in 2011.

This acquisition meant that Comcast no longer simply provided the cable connection or data packages that let their customers watch TV or stream movies. Now, Comcast has a hand in both the production and distribution of entertainment media, as well as the technology through which it is consumed.

2. Vertical diversification

Rather than expanding into new markets, companies using a vertical diversification (also known as vertical integration) strategy pursue ways to extend their reach further up or down an existing market.

Samsung is a good example of a company that has successfully vertically diversified. As the manufacturer of many consumer and telecommunications electronics, Samsung relies heavily on processing chips.

By making their own chips, instead of buying them from a supplier, Samsung is able to have more control over their vertical. They’re also able to sell their technology to direct rivals like Apple, increasing revenue in turn.

And in a similar turn of events, Apple began using its own M-series computer chip in 2020. This move freed Apple from reliance on Intel chips, and had a potential impact not only on vertical impact but also internal efficiency.

3. Concentric diversification

When implementing a concentric diversification strategy, a company will attempt to expand into markets that are related, but not directly connected to, their existing segment.

Think of what happens when you throw a stone into a pond—ripples extend outward from the point of entry in rings, right? This is what a concentric diversification approach looks like. One company continues to expand its reach in ways that radiate out from their original purpose or focus.

While Starbucks was already in the beverage business for a long time, they were focused on serving coffee to patrons in their cafes. Through a partnership with PepsiCo, the coffee shop giant was able to add pre-packaged retail beverages—using some of Starbucks’ well-known drink names—to their roster of products.

4. Conglomerate diversification

Companies using conglomerate diversification strategies expand by launching new business ventures in industries that are totally unrelated to where they started.

T-Mobile provides another good growth strategy example here—the brand is focused on telecommunications, but they also have a banking service called T-Mobile Money. The company offers its customers higher-than-average interest rates if they use T-Mobile as both a phone provider and a banking system.

By doing this, T-Mobile was able to leverage its existing customer base to build up its new, unrelated, business arm—all while offering different, but still high, interest rates to banking customers who do not also use the company for phone service.

What impacts—and is impacted by—a diversification strategy?

• Revenue, sales, and profits
• Company value
• Access to talent
• Share of market
• Geographic presence

Types of business growth

The growth that develops as the result of a successful strategy typically takes one or more forms.

Organic growth

Organic growth happens naturally as satisfied customers spread interest in a product. It’s often the first type of growth that a company experiences.

No advertising or acquisition dollars go into truly organic growth. Either existing customers encourage new ones through word-of-mouth recommendations, or the growth is nurtured with organic marketing like blog posts and social media conversations.

While you can ask patrons of your business to recommend you to their friends or leave a positive review online, they’ll need to do it of their own accord. If you start offering a financial incentive for these positive recommendations, you move into the realm of strategic growth.

Strategic growth

Strategic growth is always backed by a strategy and plan of action. It can’t happen completely on its own like organic growth.

This type of growth can take many forms–from a $1 digital ad to a $10 million acquisition. While strategic growth will look different for every company, it could include:

• Buying pay-per-click (PPC) advertising space
• Boosting posts on social media
• Purchasing a billboard
• Running an affiliate marketing program where customers are compensated for successfully referring friends and family to your business
• Mergers and acquisitions (M&A), where one company purchases another to gain its brand, customers, employees, products, or service area as part of an acquisition strategy
• Building a warehouse or manufacturing facility that’s geographically closer to a new or major market

Internal growth

Internal growth is the result of changing priorities or processes within your business to see positive results—typically in the form of better profit margins. It might involve:

• Reducing expenses, and improving profits, by changing product suppliers
• Changing the responsibilities of internal teams to be more well aligned
• Hiring independent talent with specific skill sets to speed up your time to market

This type of growth may happen organically within your company or require some dedicated strategizing and resources, like the help of a business consultant.

Partnered growth

Partnered growth happens when two companies decide to include each other in their expansion strategies. This partnership isn’t a full acquisition—each company remains its own entity. Instead, at least one of the companies provides the other with a product or service that will be of interest to its customers. The two companies may also jointly brand a product or service.

Grow your business with help from strategists and advisors

You don’t have to figure out the best growth strategy for your business on your own. Using existing templates, talking to representatives from your community’s entrepreneurship development center, and working with an experienced business development pro  or management consultant will help.

Finding a consultant is easy too. Describe your needs in a Talent Marketplace™ job post on Upwork and get connected with qualified professionals in a matter of hours. Just log in or sign up for an Upwork account to get started.

Are you a business strategist who’s able to help small businesses and startups with their growth strategies? You’re in the right place as well—join Upwork and begin connecting with clients looking for a business consultant.