5 Business Growth Strategies for Expanding Your Company

Read transcript

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 business owners’ strategies for sustainable growth and discover resources you can turn to for help in growing your own successful business.

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 initiative, it’s important that your business have a good handle on the following.

Current market segmentation

You’ll need to know exactly what your current demographic is before developing your new growth strategy. A careful analysis of your existing market segments can reveal useful insights as to what is and isn’t working in your current plan. 

Working with a market research freelancer may be helpful during this stage of the process.

Brand, messaging, and pricing

If you’re struggling to see growth, it may be that your brand or pricing doesn’t resonate well with your target market. Taking the time to figure out if you need to make any branding tweaks before launching a new growth or marketing effort can help you achieve long-term success.

A freelance branding strategist or marketing consultant on Upwork can help you with this.

Existing customer needs

As you plan for growth, don’t neglect your existing customer relationships! If sales are small, you may be tempted to go full speed ahead in your quest to find a new or different audience. Customer retention is important too, though, and that means attending to existing customer loyalty in addition to attracting new groups. You can retain your current customers and find new ones at the same time.

New customer personas

As you begin to identify the new audiences and market segments that you want to target, be sure to build customer personas for each group. A good customer persona can help you make sure all of your future efforts and plans are aligned in a way that will resonate with target audiences.

Growth goals

Make sure that your growth plans are quantifiable—that is, something you can track and measure. Setting short- and long-term business goals is helpful. Along with the qualitative and quantitative goals, you’ll want to identify the key performance indicators (KPI) that you’ll track accordingly. 

By establishing clear goals and trackable metrics up front, you can make sure your growth efforts are working … and optimize or pivot if they aren’t.

Expansion capability

As you plan for new growth, think about how much you may need to expand in the future—and whether or not your existing team or facility can support this. 

Will you have enough space to produce or store new inventory? Do your current workers have the right skills needed to handle an increase in website orders, more customer calls, or new technology rollouts? How about availability? Do you need to hire more team members in order to handle increased demand?

Hiring freelancers is a great way to add skills and resource hours to your team as you need them. You can find professionals with all of the most in-demand skills on Upwork right now.

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 second-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.

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 (just think of how many different flavors of Oreos or potato chips you can find at the store today!)
• 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 Amazon One Medical and Amazon Pharmacy, two lower-cost healthcare services that U.S.-based customers can access through their existing Prime accounts. 

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, web services infrastructure, and shipping network, 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 the existing 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 this type of business growth strategy has four components. A business using the diversification strategy may opt for any of the following four approaches:

1. Horizontal diversification

When implementing horizontal diversification strategies, companies look for market expansion and customer acquisition opportunities 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’s consumed.

2. Vertical diversification

Rather than expanding into new markets, companies using a vertical diversification (also known as vertical integration) strategy pursue growth opportunities further up or down an existing supply chain.

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 sales opportunities but also on 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 in rings from the point of entry, 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 prepackaged 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 don’t 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 increases that develop as the result of an effective growth strategy typically take 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 and referrals, or the growth is nurtured with organic marketing like:

• Blog posts
• Improved loyalty programs
• Social media conversations
• Viral social media campaigns
• User-generated content (UGC) such as customer videos 

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 related to their target audience on social media
• Exploring new digital marketing channels, such as brand partnerships or sponsorships
• Purchasing a billboard ad
• Running new email marketing campaigns
• Establishing 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 better 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. These strategic partnerships aren’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.

The Taco Bell Doritos® Loco Taco is one example of this type of partnership. By working with Frito-Lay to create a co-branded product, the fast food chain was able to bring in new customers and sell more product—100 million in the first 70 days after launch, to be exact! 

Frito-Lay also got the benefit of expanded brand exposure in Taco Bell’s store signage, online menus, commercials, and more. 

Do these business strategies require a large team?

The above examples reference large companies that are familiar to many readers. But you don’t need an Amazon-size budget in order to make growth a reality. Lots of opportunities exist for small businesses to expand using the growth strategies outlined here. 

Yes, these strategies may require specialized expertise, but if you don’t have that expertise, you can hire strategically using Upwork. 

Take Terrashroom as an example. Founder Jared Steele started his home mushroom-growing business as a one-man operation, learning basic CAD modeling and electronics skills on his own. As his product idea continued to grow, though, he began losing money and panicking about how he was going to make his business come together. 

Jared was able to hire a professional with the exact skill he needed—electrical engineering—on Upwork, and it turned his project around. Together, the two men cleaned up Jared’s prototype, improved the product’s programming, and gave Terrashroom the momentum it needed to continue. Jared hired further development and customer support resources on Upwork to help his company continue to grow. Today, you can buy Terrashroom products online—and the company’s even been on Shark Tank.

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. You can use our Job Post Generator, powered by Uma™, Upwork’s Mindful AI, to easily express your needs in a Talent Marketplace™ job post. Or, get on-demand help and curated freelancer short lists prepared by our Talent Specialists when you sign up for an Upwork Business Plus plan. Business Plus customers get access to the top 1% of talent and typically find the right fit in two business days. It’s easy to get started—you can upgrade your existing Talent Marketplace™ account or sign up for Upwork today.

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