More than 50% of companies fail during their first five years of doing business. That’s why applying proven and efficient strategies that enable business to grow is one of the most important things during early stages of company development. In this article we reviewed 5 strategies that we consider the most helpful for small business entrepreneurs.
1. Increasing Market Penetration
This is the strategy for businesses that are entering the market and trying to take away the share of their competitors. It’s important to take market penetration very seriously, since it will lead to increase of company’s products or services, market growth and higher revenue. These are some of the ways to increase market penetration:
- Offering better quality product
- Selling products through more distribution channels
- Increasing product or service promotion
- Lowering the product or service price
2. Implementing Market Segmentation
Market segmentation is a very useful strategy that involves precise targeting and singling out one part of the market that would be interested in products or service that company’s offering. Although some entrepreneurs think that with this kind of precise targeting they will loose one part of the market, this practice actually increases conversion and the overall number of interested customers. This strategy also gives small businesses a chance to develop several different products for each segmented part of the market.
Market segmentation is incredibly useful for online promotion and it is also easy to implement due to very helpful tools that come with Facebook, Google and Instagram ad managers.
Some of the most notable examples of market segmentation are:
Fiat and Chrysler’s Jeep Renegade
Although Jeep vehicles were mostly associated with more conservative crowd in the US, new model produced in Italy, targeted young and adventurous people, with its look, features and commercials.
When they saw they can’t compete with Coca Cola for the title of most popular soda, they targeted younger and more fun loving crowd, by hiring sport and show biz stars for promotion.
3. Making Partnerships
It’s sometimes hard to compete with big corporations, but small business can become much more competitive with one or a few smart and useful partnerships. Production businesses are advised to partner with companies that provide distribution channels for their products, while retail and other companies in the sales niche, should partner with product manufacturers in order to get bargain wholesale deals.
Some of the best known partnerships from the corporate world are:
NASA and Lego
partnership made for improving children’s education and spurring their interest in NASA’s space exploration with space themed LEGO sets.
American Express and Foursquare
for making special deals for Amex car holders.
4. Doing Acquisitions and Takeovers
After mentioning acquisitions, first thoughts that come to mind are usually big corporate deals that seem inapplicable in small business world. Whatever small some business is, there is always the one that’s even smaller and less developed, especially in digital age, where almost every business idea turns into a startup. Small companies need to be very careful with acquisitions due to very limited funds. They need to choose smaller companies with potential to bring great profits with smart ideas and talented workforce. Entrepreneurs also need to have an elaborate development and improvement plan for their new business branch.
In corporate arena, acquisitions are an everyday thing. These are some of the examples:
Facebook acquired WhatsApp
acquisition worth $19 billion that improved Facebook’s stock’s price and turn WhatsApp into one of the most popular messaging apps in the world.
Aol. acquired Time Werner
which is the biggest acquisition up to this date, worth $164 billion.
Improving Debt Collection
Debt collection is one of the most difficult tasks for small business entrepreneurs. Avoiding bad debtors in the first place is one of the most common advices concerning this problem, but sometimes it is hard to single these out from list of individuals and businesses company cooperates with. Companies that already struggle with debt collection should implement some of these debt collection techniques:
- Make debt collection more personal- address certain company individuals with personal letters and use straightforward calls to individuals and company officials to remind them about their debt
- Delay all shipments and services until the debt is paid
- Hire a debt recovery agency.
Business strategies are exceptionally important for small businesses. In startup era, each business niche is crowded with rivals, and only by making smart business moves and implementing these business strategies, companies will be able to stay competitive and increase their customer base and revenue.