Are your marketing and operational strategies are running smoothly, and the business is achieving a stable ROI? That’s fantastic! You may be feeling it’s the right time to expand your business to elevate business growth, but how, and what do you need to kick-off this journey? Answer: You have to decide on a business growth strategy that suits your specific financial goals. This article serves as a guide to the best business growth strategies available to you.
Top business growth strategies
In a well-written article published on Entrepreneur South Africa, author and franchise consultant Mark Siebert discusses some of the advantages of franchising which include but are not limited to the capital required, speed of growth, motivated management, and risk reduction. Let’s take a closer look.
Please note that this article is a foundation on which the conversation is based. It has been used as a high-quality resource, and nothing has been copied verbatim. We’ll be focusing on the following six advantages.
Access to enough capital is one of the prime reasons that inhibit SMEs’ business expansion plans. However, franchising offers entrepreneurs an alternative way of acquiring capital without running the risk of getting into debt.
This is financially beneficial because the franchisee (the individual or company that buys into the business) provides all of the funds needed to open up a branch. It allows the franchisor’s business to develop through other entity’s resources. Furthermore, the franchisee signs the lease as well as other necessary contracts, so expansion takes place with minimal liability to the franchisor.
Franchising significantly lessens the amount of capital needed to expand will minimise risk. In addition, there is hypothetically no limit to the number of franchisees, so if you have many interested parties, franchising is a growth method that will expose your product/service to a broad audience quickly, which in turn creates a plethora of marketing opportunities to spread brand awareness, drive quality traffic to your website as well as establish your business on social media platforms.
For start-ups and SMEs in particular, expelling the competition is one of an entrepreneur’s biggest challenges. You may have a revolutionary product/service that will sell extremely well but to do so; you need to grab a chunk of the market share quickly. Franchising gives a business this much-needed jumpstart because the franchisee does the majority of the work.
Franchises working simultaneously can give the franchisor the necessary human resources and capital to compete with larger companies. In this way, they can saturate markets before competitors.
Easing of micromanagement
In this regard, franchising is beneficial because the franchisee(s) are responsible for the daily operations of each unit – you don’t have to micromanage at all. The onus is on them to ensure the franchise meets required targets; they are also solely in charge of negotiating and paying staff salaries so your financial returns won’t be affected.
Franchisees are required to take on potentially time-consuming activities including site selection, lease negotiation, marketing as well as hiring and training of employees. Necessary operations such as payroll and accounting are also their responsibility. For these functions to run smoothly, it’s a good idea to speak to HR professionals who can advise and implement the necessary elements.
The franchisor is, therefore, able to financially leverage off a group of self-supported units, meaning that the franchise organisation has the potential to increase profitability.
Due to franchising growth strategy infrastructure, a franchisee can generate a higher revenue than a manager of a competing independent establishment. Also, franchises usually have their cost structure and operate the unit more cost-effectively even after taking into account what needs to be paid to the franchisor.
As mentioned above, the inherent nature of franchising reduces a franchisor’s risk. They are in charge of everything from equipment purchasing and maintenance to any working capital that may be needed. Also, any liability that takes place in the unit is the franchisee’s responsibility, such as employee and/or customer litigation or accidents that happen on the premises.
Affiliate strategy (independent agents)
Do you want to earn passive income? It’s possible if you utilise an affiliate marketing growth strategy correctly. So, what is it exactly? Firstly, let’s answer these fundamental questions.
What is an affiliate?
An affiliate is a person or company that is licensed by another business to market their products and/or services. Essentially, they help a business spread brand awareness, garner interest from a broader audience and make new sales.
How do affiliate programmes work?
Affiliate marketing is based on a revenue distribution model which essentially means that third parties undertake promotion of products and/or services, and the revenue from sales is shared with the affiliate marketer.
An article published by Forbes says that by 2022, the affiliate marketing industry is forecasted to eclipse the $8 billion (approximately R130 billion) mark, nearly double what it was worth in 2015. Today, affiliate marketing is one of the most effective ways to earn an income online, drive sales and increase brand awareness.’
Author of the article, Amine Rahal, provides a clear breakdown of the typical parties involved in affiliate marketing.
The creator: Otherwise known as the vendor, the creator is a business or brand that offers a product or service and shares revenues with affiliates.
The affiliate: The affiliate, or publisher, is a business entity or individual who advertises the creator’s product or service and receives a share of each sale that they help generate.
The consumer: The consumer is the customer of the creator, who buys their product or service via an affiliate marketing channel.
The power of affiliate marketing stems from the unique distributed networking model. There is a lot of opportunities for lucrative passive income to be generated. It needs to be noted that there are three different payment structures involved. The one which is chosen is based on vendor and affiliate preferences.
- Per sale
The affiliate is paid a commission of each sale via the affiliate’s custom product link.
- Per lead
The affiliate receives payment for every prospective customer who completes the desired action, such as signing up for a newsletter.
- Per click
The affiliate is paid an agreed-upon amount for every user that they redirect to the vendor’s website.
The following are a few key takeaways from how affiliate marketing works, according to Neil Patel.
- You hire affiliates who are paid to bring customers to you.
- You only pay affiliates if visitors to your website convert to customers.
- Each affiliate has his/her strengths. For example, they may be very adept at content creation, meaning that they can ‘package’ your product/service in a way that reaches a particular audience that would otherwise have not been tapped.
- It’s a beneficial strategy for start-ups because it is generally cost-effective, so if your business is operating on a shoestring budget, this may be the best growth strategy to consider.
An acquisition occurs when a company decides to purchase the majority, or all, of the shares to gain control of that company. If more than 50% of the stock and other assets are acquired, the purchasing company has the authority to make decisions about what may happen to the assets without the approval of the acquired company’s shareholders.
An adequately understood and well-crafted acquisition strategy is ideal for business expansion as well as reinforcing cash flow. Furthermore, it adds significantly to the company’s value offering, which plays a significant role in reaching a broader audience, generates marketing-qualified leads (MQLs) that have a higher probability of converting.
At this point, it’s important to remember that an acquisition strategy should always dovetail a growth strategy of the core business, don’t let it take over. In other words, central organic marketing and growth strategies should be running seamlessly before an acquisition is considered.
How can an acquisition strategy enhance organic growth?
Acquisition to increase market share
In saturated industries, the acquisition of a business to increase market share can boost organic growth by reaching out to a broader demographic of prospects. Furthermore, acquiring a larger piece of market share significantly the entrenches the business’s position to open up opportunities to increase profitability through economies of scale.
Acquisition to add products and/or services that complement each other
The adding of new products and/or services ensures that the parent company can sell more to existing clients as well as providing opportunities to target potential new, broader audiences. The apparent benefits are an increase in revenue and profits, but it’s also an opportunity to create long-lasting strategic relationships clients which open up access to previously untapped markets.
Acquisition for Diversification
History has shown us that even industry titans with successful business models such as Apple, Samsung and Amazon are not immune from taking hits to its core market. Whatever the causal circumstances may have been, it propels the need for asset diversification to strengthen business, especially during periods of uncertainty such as the current global pandemic that has severely hurt the world’s economy.
It can be deduced that an acquisition strategy should only be considered and implemented if it will clearly enhance and complement a long-term growth trajectory. Please ensure that the acquisition is never made to compensate for another failed strategy, or as a way to restructure a business model.
The good news is that if acquisitions are conducted correctly, they have enormous potential to accelerate complementary business growth strategies and revenue. The primary reason for purchase should be to offer more value to potential and existing customers in a more efficient way.
Human capital strategy
A human capital strategy is the practical application of a sound overarching business strategy that outlines the resources and skills needed for a business to operate effortlessly to achieve established objectives. At its core, it’s based on extensive workforce planning supported by proficient management policies and procedures.
The reality is that without a team with the required skills to implement and execute a business strategy, revenue growth and expansion won’t come to fruition.
How to formulate a human capital growth strategy successfully
Align your human capital with your company’s growth goals
Start by revisiting your company identity and company profile which contains the foundations of your business: your vision, mission and values. Ensure that these tenets reflect your business’s objectives.
Assess and define the processes that contribute to achieving your business goals
Before you go any further, it’s vital that all of your policies and processes are well written and clearly understood. New processes will likely be implemented during this time, but once you have a solid foundation, decide on your core and supporting operations – are they as efficient as they could be? It’s best to consult a professional, reputable HR company that will ensure everything is up to standard.
Identify the key performance indicators (KPIs) used to measure performance
Establishing and refining processes is what the business needs to function; now, determining the how is necessary. What KPIs are required for each department and employee to help achieve the business’s goals? Assess the skills and traits that an employee needs to fulfil the job role.
Who will fill the required job roles?
The KPIs are a blueprint that will help you identify which person would best for the job role. The next step is to start assigning staff to positions and/or start the recruiting process. Everything isn’t likely to fall into place straight away, so patience is paramount. It’s going to be a journey, and along the way, you’ll learn critical lessons and methods to improve your human capital strategy. If done correctly, you’ll be well on your way to growing revenue as well as fostering trust and loyalty from your employees. Remember that your staff members are your most valuable assets period.
Each of these growth strategies contains structures that you can use to grow your revenue and scale your business. If you would like some help, Fio, has all the essential divisions and expert team members to support you along the way.