Business Growth Strategy Defined<\/h2>\n
A Business Growth Strategy<\/strong> is a roadmap for growing your firm. It describes the industries you will serve, the types of clients you will target, the services you will offer and how you will position and develop your brand.<\/p>\n But it can\u2019t be all unicorns and rainbows\u2014it has to consider potential pitfalls, too. Any strategy worth its salt will explore potential risks in the marketplace and balance them against the expected upside.<\/p>\n Download The Visible Firm Guide <\/a><\/p>\n<\/div>\n Get the growth strategy right and everything else is easier. A good growth strategy will replace random and opportunistic business development with a reliable and systematic approach to growth. Get it wrong or incomplete and your firm may flounder.<\/p>\n There are five time-tested strategies for growing a company. These aren\u2019t new. In fact, they frequently come up in professional services marketing and strategic planning discussions\u2014but these strategies are often poorly understood. Depending on your situation, the strategy that\u2019s best for your firm may require more or less risk. If you work at the heart of a highly competitive market, for instance, you may need to pivot to an underserved area. But if you have a strong reputation or a viable niche practice, you may be able to achieve new growth with less dramatic changes to your approach.<\/p>\n Below, I describe each of these strategies, starting with the least risky:<\/p>\n In the consumer products world, this strategy involves selling more product to the same consumer group. A good (but fattening) example from the retail food industry is super-sizing. The conventional wisdom is that if a dozen French fries are good, several dozen are even better. \u201cMay I supersize that for you?\u201d is a relatively easy way to get more business from an already captive target market.<\/p>\n In the (much less fattening) professional services world we think of this approach as offering more services to the same client. It\u2019s a relatively easy, low-risk strategy that doesn\u2019t require introducing anything new.<\/p>\n That\u2019s not to say it\u2019s completely without risk. If you serve a relatively small number of clients, losing just one of them could put your firm in dire straits. There is also the challenge of getting a client to understand the full range of services your firm offers. Research we conducted for our book,\u00a0Inside the Buyer\u2019s Brain<\/em><\/a>, shows that most clients are not aware of the full range of services a provider offers. This means that cross-selling your other services may not be a straightforward task. Many firms watch in dismay as their clients select other providers to carry out services\u00a0their own firm<\/em>\u00a0could have handled with ease. Clients have a tendency to place their service providers in narrow mental buckets. So while there\u2019s plenty of room for services providers to increase business\u2014and revenue\u2014from their existing client bases, they have to figure out how to educate their clients about their full range of capabilities.<\/p>\n This strategy involves offering your existing services to a new market. Let\u2019s say that today you offer regulatory compliance consulting services to commercial food packaging companies. Offering these same services to the consumer food industry\u2014or even an unrelated industry, such as government services\u2014is an example of this strategy in action.<\/p>\n This is one of the most common growth strategies used in the professional services. In fact, many firms take it to the extreme and roll out their services to any and every type of client. After all, more potential buyers means more sales, right?<\/p>\n In fact, this strategy comes with significant dangers. For one thing, it costs money and resources to educate and nurture a new audience. And the peril of underinvesting in markets is very real. Sub-threshold investments may be wasted and produce few results. Then there is the very real risk of diluting your brand. If you are strongly associated with a particular market and you expand to include other markets, any advantage you have as a specialist could dissolve.<\/p>\n Traditional consumer products companies sometimes use alternative distribution channels to promote products in saturated markets. For instance, if its competitors are distributing through retail channels, a company may decide to market their products directly to end consumers using direct response. Affinity marketing and multilevel sales organizations are other common examples of alternative channels.<\/p>\n In the professional services, alternative distribution channels are less common\u2014though they\u00a0do<\/em>\u00a0exist. For example, firms can partner with a trade association or business group to get in front of their membership. Or a firm could partner with complementary but non-competitive service firms to widen their reach. Think law firms teaming up with accounting firms. And some firms even use independent \u201cdistributors\u201d to offer their product on a \u201cwhite label\u201d basis.<\/p>\n Since this strategy doesn\u2019t involve developing new services, its risks are primarily related to marketing and business development costs: will the time and expense it takes to develop the channel pay off in the end? Another potential risk is damage to your brand if the alternative distribution channel you choose is not credible.\u00a0<\/strong><\/p>\n This strategy involves developing a completely new service that you do not currently offer. On one level, professional services firms do this every day. No two clients have identical needs, so services naturally proliferate.<\/p>\n However, there are circumstances in which a firm may want to branch out and offer more than a variation on its current services. For example an accounting firm may want to offer internet security services or financial planning to complement its traditional tax practice.<\/p>\n A growth strategy that includes new services involves a number of risks. Developing a new service takes time\u2014lots of it. That could distract you from other important activities, such as billable work or business development. There may also be regulatory obstacles to overcome in industries such as law, accounting and financial services.<\/p>\n Perhaps most dangerous of all is the\u00a0risk of watering down your brand. Remember the old saying, \u201cjack-of-all-trades, master of none\u201d? In the pursuit of broad market recognition, you could become known for nothing at all. The broader your service line, the less focus you have on a core expertise. You may end up throwing away what people associated with your business\u2014the one thing that made you memorable in the first place.<\/p>\n You must also consider if your market will accept your firm as a provider of that service. Will it appear to be a conflict of interest? Will it alienate established referral sources? Does it fit with your brand? Regardless of your ability to deliver that new service, will it fit naturally into your current portfolio of services? Or will it be an incongruous appendage, raising uncomfortable questions in the minds of prospective clients?<\/p>\n Offering new services to new markets is perhaps the riskiest growth strategy. It combines the challenges of developing and launching new services with the uncertainty and costs of cultivating a new market. Yikes.<\/p>\n The potential opportunity must be substantial enough to justify the associated risk. For example, you may have realized (or been told) that your existing expertise offers a unique, high-value solution to a problem in another industry.<\/p>\n Here\u2019s a case in point: One of our clients in the consumer market research field developed a new software platform to better serve their diverse client base. In the course of creating the platform, they learned that it could also address a specific problem faced by medical researchers. To take advantage of this new opportunity and avoid muddying their brand, they created a new firm to pursue that new-product\/new-market opportunity.<\/p>\n Download The Visible Firm Guide<\/a><\/p>\n<\/div>\n Determining your firm\u2019s growth strategy can be a risky proposition. Each option presents a unique risk profile. And every firm has it own set of realities. For example, is the risk of expanding your geographic presence (new market) a bigger risk for your firm<\/em> than adding a new service within your existing geographic footprint?<\/p>\n The key point is that all risk vs. opportunity assessments must be based on the specifics of your situation. In the example above, does the new market already know about your firm? Is there an underserved market in that geographic area? Is it a service that your existing clients need? Does the service fit your firm\u2019s existing brand? Could it harm your reputation?<\/p>\n Once you\u2019ve raised the tough questions and answered them, you\u2019ll find it easier to make decisions about your growth strategy.<\/p>\n But how do you get this information? The answer is research. By doing systematic professional research on your strategic options you are able to answer questions like these and uncover insights you hadn\u2019t thought about. In short, research reduces risk.<\/p>\n While a full discussion of the research process is outside the scope of this article, you can explore it further in this post<\/a> about applying research to guide decision making in professional services firms and this one<\/a> that will help you select which type of research to do.<\/p>\n There is another major decision to be made before you lock down your strategy. How will you implement it?<\/p>\n Once you\u2019ve settled on a growth strategy there are two paths you can take to implement it.<\/p>\n The first is organic growth. This means adding business from new or existing clients by using resources you already have at hand, such as skills, knowledge, experience, relationships and tools. While slower and more evolutionary than the alternative\u2014growth by acquisition\u2014it is also typically healthier, more reliable and more valuable in the long run. Organic growth is inherently a reflection of the expertise and value associated with your firm.<\/p>\n If you\u2019re going to chart an organic growth course, you\u2019ll need to accomplish five key tasks:<\/p>\n To learn more, check out my\u00a0blog post on organic growth<\/a>\u00a0or watch the video blog below.<\/p>\n5 Proven Growth Strategies<\/h2>\n
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Increase Market Penetration<\/strong><\/h4>\n<\/li>\n<\/ol>\n
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Develop New Markets<\/strong><\/h4>\n<\/li>\n<\/ol>\n
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Develop Alternative Distribution Channels<\/strong><\/h4>\n<\/li>\n<\/ol>\n
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Develop New Services<\/strong><\/h4>\n<\/li>\n<\/ol>\n
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New Services to New Markets<\/strong><\/h4>\n<\/li>\n<\/ol>\n
Reducing the Risk of Your Growth Strategy<\/h2>\n
Organic Growth vs. Acquisitions<\/h2>\n
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