5 Big-Business Growth Strategies Small Business Can Use

Every small business wants to grow into a big one someday. Consider these five key growth strategies.
November 29, 2011

Eventually you want your small business to grow into a big business, right? If that's true, then learn which big-business growth strategies might work for you.

Here are five growth strategies that small businesses should consider. Not every strategy will be right for your situation, but some of these might offer an opportunity for your business.

1. Market segmentation

“Market segmentation” simply means picking a sub-set of the entire marketplace that you can organize your sales efforts around. Out of all the people in the world, who will you try to sell to?

Most big businesses are good at carving out their corner of the market. Then they do whatever they can to own that space.

Red Bull gets its energy drinks in front of a young, adventurous crowd: its segment of the market. Have you wondered why Red Bull owns a Formula One racing team? That’s why.

Pepsi was losing its battle with Coca-Cola to become the heavyweight cola company. Instead of trying to beat Coke at its own game, Pepsi focused on a young, fun-loving demographic. Many Pepsi commercials show younger music stars, celebrities or other young status symbols.

In other words, Pepsi stopped targeting the over-30 crowd and segmented its market. Coke is still the top dog, but thanks partially to market segmentation, Pepsi has built a very successful brand as well.

Most small business owners would be happy with building the next Pepsi, but many are afraid to eliminate part of a potential market. It can seem scary, but you need to focus on your core customer if you want a clear path to growth.

Segmenting your market comes down to making choices. Who will you serve? Who will you avoid? And which segment can you focus on to improve profitability?

2. Leveraging partnerships

Some small business owners love to complain about how they can't compete with the vendor relationships that the big guys enjoy. It’s true you can't "pay to play" like the Fortune 500s, but you can leverage partnerships in a savvy way.

For example, let's say your small business makes tennis balls and you have a technology that makes the balls bounce better and last longer. You have a great product, but you don't have a manufacturing facility, a distribution channel or any of the other parts of the tennis-ball supply chain. All you have are great tennis balls.

You may not be able to compete with the big industry players like Wilson, Penn or Prince for sponsorships or tournament partnerships, but you could partner with a tennis-ball factory and a distribution company. In fact, you could partner with them without having to pay a cent for your own factory or distribution. Just pay your partners a portion of the profit every time you sell a tennis ball.

The result? You negotiate for mainstream production and distribution without paying the huge upfront cost of building a plant or hiring a shipping company. Now you can focus on selling tennis balls instead of worrying about making them.

Big businesses can pay for partnerships up front. Small businesses have to negotiate for partnerships that pay per sale.

3. Use checklists

Big businesses have massive facilities, complex supply chains and large equipment. Managing the day-to-day operations in these environments is too complex for one person. There are too many variables to track.

Guess what? Small businesses are the same way. Small business owners have to wear many hats. If you don't hold yourself accountable and remind yourself to do something that "brings home the bacon," then it's easy to get caught up doing things that aren't essential. In the rush of a normal day, it's also easy to forget to do a critical task.

Take a page from big business and develop process lists or checklists for specific tasks and jobs. Give yourself a guide to success and a reminder to do the essentials each day.

4. Acquisitions

Perhaps the primary way that most big businesses grow is through acquisitions. Before you think I'm off my rocker by suggesting this move for small businesses, let me explain.

First, acquisitions are tough. You can easily break the bank with one bad purchase. That said, acquisitions can be a massive source of profit and a means to growth if you make a few key moves.

You know what's a good buy in your industry. Follow tip No. 3 and keep to a specific list of characteristics that you're looking for. Don't let emotion or ego play a role in a major purchase. Stick to the checklist.

Secondly, do you have the budget to buy up everyone in the industry? Probably not. I'm not suggesting that you buy something you can't afford. But you can afford some businesses, especially those that you can improve. Don't dismiss acquisitions just because you're small.

5. Become a leader in the industry

Big businesses often make their name by leading an industry. They make moves when other businesses sit by the wayside.

I was recently talking with the employees of a large distribution company that wants to do business in China. There's just one problem: The distribution company ships products for other companies and those businesses don't trust the distribution channels in China yet. As a result, the distribution company isn't selling in that region.

If there are no products to ship to an area, the company doesn't set up distribution in that area. But if there’s no reliable distribution network, nobody ships products. It becomes a chicken or egg problem where neither side wants to move first.

So what does this company do? They say, "We know you don't like the distribution there, so we're going to fix it. Then, you can give us all of your business in China."

Is it a bold move? Yes.

Is it an expensive move? Yes.

Is anyone else currently doing it? No.

Does that mean that there is a huge opportunity for growth? Yes.

What's the lesson for small businesses? Don't be afraid to solve the hard problems that everyone else avoids. There is a lot of money to be made when you're the first person to fix something.

James Clear is the founder of Passive Panda. He is an award-winning writer on business strategy and entrepreneurship and has delivered speeches in the United States, Britain and Switzerland.