For many businesses out there, growth isn’t something that’s nice to have: it’s essential. But how do you grow in a bad economy?
Many pundits and commentators are of the opinion that the 2009 recession never really ended. Instead, we’ve been living in something of a dream world where we’ve been told by politicians that the economy is growing strong, and yet wages aren’t rising, and productivity remains flat. The zombie economy, as some are calling it, is a nightmare for startup companies wanting to make a difference in the world and expand their nascent empires.
So what can businesses do to grow in this new economy? Here are some ideas.
Focus Your Selling Efforts On Your Existing Customers
Making more money by selling to new customers is a good long-term strategy but, in terms of marketing, it’s expensive. It costs about eighty percent more to get a new customer than it does to sell more to an existing customer. Companies that find themselves in a declining market should focus intently on finding customers that will be willing to buy more of a product that they already sell, or would like to upgrade to a higher-margin service.
Expand Into New Territories
If the local market is declining, perhaps because of deindustrialization, it might be time to look at ways of expanding into new markets. Different geographic areas go through cycles. Sometimes their economies boom, like Detroit in the 1960s. And sometimes their economies go bust, like Detroit after the financial crisis.
If you’re a retail business, you might look to expand into different areas to try to capture a booming market. For instance, thanks to the wealth generated by tech firms, many retail stores are moving to areas around Silicon Valley in California, the region with the second highest income anywhere in the county.
Logistics firms can also expand by building new commercial steel buildings to serve local markets. Ecommerce companies can actually dramatically lower their costs by located their warehouses closer to their target markets. According to Tri Nguyen, the CEO of Network Capital Funding Corporation, when businesses are expanding into new areas they need to think carefully about their marketing. They need to adapt their approach to the new region. When moving within a country, this isn’t usually a problem. But if your small business is looking to establish a beachhead overseas, you might need to do some work. Even small things, like tweaking your logo or changing the images that you use on your website can make a big difference.
Use New Delivery Channels
One of the reasons that Walmart is struggling today is because the company is competing with “digital Walmarts,” like Amazon. Walmart’s problem all along was that it didn’t invest in new delivery channels early enough when the Internet first came along. Now it’s playing a game of perpetual catch-up which it surely cannot win in the longer term. Meanwhile, Amazon is developing extremely sophisticated artificial intelligence technology that will enable it to better meet its customer’s needs than any other retailer in the world.
The Amazon and Walmart example is a good one for small businesses that want to expand. Often the best way to expand is to find a new channel through which to sell to customers. The latest frontier is social media. Many social media websites, like Twitter and Instagram, are looking for ways to embed sell options for certain items in the social media apps themselves. In theory, this means that customers can just see a picture of something they like and have the option to buy it.
Although some companies struggle to reinvent themselves on different channels, many have had a lot of success. Game, for instance, managed to make the move from in-store sales to digital computer games sales and is still around today. The same goes for other giants, like PC World.
Merge With Another Business
Merging is the fastest way to grow a business, period. Many companies do it in order to get access to larger markets and more resources. The most recent high-profile example of this was the acquisition of DeepMind by Google. DeepMind was a London-based company with a lot of expertise in the AI space, but they lacked the resources to develop their business in the way that they wanted. They decided to sell to Google and be gobbled up by the giant tech company. This then gave them access to the tools that they needed to continue their research.
Small businesses can do the same, either by merging with another business or being bought up.