Every business started small, whether five years ago or 50. Even the largest corporations once had a handful of employees — or none at all.
Did you know there are over 33 million small businesses in the United States? They account for over 99% of American companies. The thriving corporations of tomorrow are among those small organizations.
The U.S. government classifies small businesses by industry, with the lowest maximum being $2.25 million in revenue or 100 employees. You’re growing a small business if you’re under your industry’s minimum and working to expand.
To make that happen, you’ll need a growth strategy — a plan for when and how to expand your small business. By the time we finish here, you’ll have the framework of a plan you can start using immediately.
Strategies for business growth
Small business growth is a game of skill, not luck. You need proven success tactics as part of a strategy that makes sense for your organization — not “companies in general.”
Consider this section your blueprint. Read through these six tips on growing a small business, then brainstorm how they would apply to your company.
1. Conducting research and market analysis
We live in a data-driven world where the more information you have on your market, the more effectively you can grow your small business.
So, let go of the idea that market research and analysis are big-budget strategies. If you have a website and a basic social media page, you can gather data on the kinds of customers that gravitate to your business.
To learn about the competition, check out industry-related pages on sites like Reddit and Quora. Search for topics that match the problems you solve and the questions you answer. Then, research how your competitors do things. You can learn from their successes and mistakes.
2. Building a marketing and sales funnel
Imagine you’re pouring flour through a funnel to fill a large jar. The more flour you pour into the funnel, the faster you fill the jar.
If that sounds obvious, consider whether you’ve created a purposeful sales funnel. Many companies don’t, which turns their customer pathway into a marketing sieve.
It takes about eight touchpoints with a company before a customer buys, and those touchpoints follow a predictable pathway.
The more you know about your funnel, the more strategic you can be about your customer messaging. Think about what you can say to move each reader to the next phase.
3. Optimizing customer retention and acquisition
Remember the old saying, “Make new friends but keep the old”? It’s also the best possible motto for growing a small business.
When customers are happy enough to come back, they drive more revenue at a lower cost. According to one management consulting exec, businesses must acquire three new buyers to make up the revenue from one lost customer. This retention is a matter of offering a great experience and staying in touch between purchases.
Take email marketing for small businesses, for example. By sending the right messages at the right time, you can stay top-of-mind with buyers who already appreciate you.
4. Leveraging corporate social responsibility
Growing a small business means adapting to what the market wants, and today’s market wants responsible companies. Over the past five years, 56% of revenue growth belonged to companies making environmental, social, and governance (ESG) claims — in other words, promising to use their resources to make the world better.
Now, look at the difference between ESG-aware and non-ESG-aware companies:
This data shows how much more consumer money goes to companies showing corporate social responsibility. Image source: McKinsey & Company
Giving back isn’t just kind; it’s strategic — especially for small businesses aiming to grow.
5. Forming strategic partnerships
Speaking of strategy, did you know you don’t have to grow alone? Joining forces with a partner program can help you expand your reach while helping another business grow, too.
Here’s one of the best-known examples, at least among book lovers and coffee enthusiasts:
You don’t have to be Starbucks and Barnes & Noble to make this work. The key is finding a non-competing business that serves a similar audience.
For example, if you have a real estate brokerage and want to expand in your area, you might buddy up with a mortgage company. You refer clients to each other, giving both a better chance of growing.
6. Exploring scalability options
Marketing isn’t the only way to increase revenue for your small business. Adding or repackaging products or services is another option. Subscription options can work well for companies with frequent recurring purchases, and any business can try cross-selling at the point of sale.
Then, there’s the big F — franchising your business — a strategy for those with a solid business model and the ability to handle more locations. Franchising lets you partner with another entrepreneur to serve a broader geographic base.
What are the five stages of business growth?
Growing a small business happens in four to five stages, presented here as five for clarity.
They are:
- Operational: You’re in business but still working toward a sustainable model.
- Viable: You have a product or service that brings in and retains customers. You’re close to or just achieving positive cash flow.
- Succeeding: You’re consistently in the black and are ready to grow or stay where you are, depending on your goals.
- Scaling: You make the management and cash flow decisions shaping your company as it grows.
- Maturing systems: You use rapidly increasing resources to scale your management team and tech infrastructure. You think bigger in your strategic planning.
The most significant difference between stages is how you plan and prioritize. Your bottom-line numbers should consistently increase — but expect some peaks and valleys.
Check out this typical trajectory:
Strategic decision-making is crucial to successfully navigating this process. Always think about what you want the company to look like two or three stages ahead, and use that vision to structure your management team. Hiring and delegating are the keys to avoiding inefficiency.
Operations and marketing: Setting yourself up for growth
Growth isn’t just about marketing — it also requires rethinking how your business works. When companies implement purposeful growth-focused operational models, their shareholder returns are three times higher.
Scalable systems
To prepare for growth, you can look ahead to the kind of business you want to be in a few years and determine if your tech stack can support it.
If you’re poised for growth, it’s time to invest in more scalable systems. The best software for a growing small business includes:
- A customer relationship management (CRM) tool to help you track buyers
- A digital marketing platform that integrates with your existing tools
- A collaboration platform that makes it easy to communicate within and across teams
Scalability is key. Growing a small business is only possible if your tech and operations support higher volume while maintaining quality.
Consider what would happen if you reached your growth goals next week. Ask yourself if your current structure could support those numbers, and plan accordingly.
Plan for growth, but be ready to accept risk. Larger organizations can’t pivot as quickly as smaller ones, so have a backup plan for when the unexpected happens. Consider situations that are common to your industry and universal risks like data breaches.
Leveled-up marketing assets
One of the most essential elements of growing a small business is looking like one. Upgrading your essential marketing activities shows you’re ready to play in the big leagues.
For example:
- Redesign your website: Optimize for search engines so more customers can find you, focusing on appealing to your target market. Update the style and make sure the site functions smoothly to drive more conversions. Consider working with a designer to make it genuinely polished.
- Build a content marketing strategy: Boost your online presence with multimedia content that emphasizes your expertise.
- Embrace contemporary PR: Get your name out there by touching base with influencers, posting on popular websites as a guest, and encouraging your customers to mention you online. The more people talk about you positively, the better your public relations will be.
- Encourage referrals: Create an incentive system encouraging customers to send new business your way.
Innovate often, using marketing platforms in new ways as you expand your capabilities. Experiment with user-generated content, such as a photo challenge that invites customers to post pictures about their experience with your project. Or, reach out to new influencers with larger audiences.
Refined branding
There are only so many ways to grow your business without spending money, but branding is one of them. All you need is an entrepreneurial vision and a sense of your company’s personality.
The stronger and more defined your brand becomes, the easier it will be for customers to connect to it, and the stronger your market position will be.
It’s like becoming the popular kid in high school — if everyone knows your name, you’ve made it.
Consistently branded materials are essential to this process. Constant Contact offers access to hundreds of customizable branded templates for email, search ads, and website content. Send consistent messaging that makes you recognizable, and you’ll look like a big company before you actually are.
When the time is right: Expanding your business horizons
Once you have your operations, tech, and marketing strategies in place, you’re ready for the big decision — when to move and expand.
You’ll need financial resources to grow, so having a profitable small business is the first step. You’ll also need actionable strategies, which means you’ll have to decide how you want to grow. If you’re thinking about new products or services, it’s time to make decisions.
Look at available market opportunities and niches, both local and beyond your existing borders. Explore new and different online sales channels, from marketplaces like Etsy to social media selling. Thanks to selling platforms like TikTok Shop and Facebook Marketplace, growing a small business with social media is more accessible than before.
Franchises, acquisitions, and business partnerships are more resource-heavy options, but they work for many ambitious small businesses. You don’t need cash in the bank, either, provided you can convince investors to understand your vision.
Growing a small business always has financial impacts. Crunch the numbers to be sure you can afford any growth-driving strategies you plan to implement, from marketing costs to buying the best software for a growing small business.
Measuring success with key performance indicators
Growing a small business is a big project with multiple small steps. The closer you pay attention to each step and its results, the more prepared you’ll be to move forward.
Start by tracking these valuable growth metrics:
- Customer lifetime value (CLV): The total value each customer brings in
- Conversion rate: The percentage of leads who become customers
- Customer retention rate (CRR): How many of your customers return over a set period
- Return on investment (ROI): The amount of revenue from a particular strategy, such as a marketing campaign or acquisition
- Total revenue: The full amount you earn from customer purchases
- Net profit margin: The amount remaining after you’ve paid all expenses
Focus on broad trends and look for connections, such as an increase in conversion rate after your web redesign. Use the insights you gain to refine and adjust your growth strategies.
Next steps for growing a small business
Whew — that was a lot! We’ve explored the whole trajectory of growing a small business, from the essential preparatory steps to the operational changes you’ll navigate. We’ve talked about how to decide you’re ready to grow and how to track success so you keep moving forward.
Now, it’s time to take that first step. As you’ve learned, a loyal customer base is essential; staying in touch is how you build those relationships.
In other words, it’s time to get started with email marketing. If you don’t already have a list, build one and divide it into segments based on your target audience’s interests.
As you do that, start researching your competitors and building a strategy for your first growth phase. Decide whether to add a new product, package products differently, or explore new markets.
And remember, growth is all about learning. Keep up with marketing best practices and adapt as the business environment changes. Success is all about being flexible — and as a small business owner, you know that better than anyone. You’ve got this!
