Growth Strategy: For Small Business SME

What is the meaning of “Growth Strategy”?

Using simple terms, we can define Growth Strategy as ideas that are drawn out by an organisation for obtaining their robust growth that will make more money and profit for the organisation. Every company wants to do better, make money to pull through  every year and stay on point. Every organisation needs to figure the “HOW” in order for them to come up with good growth strategies.

Models and strategies for the SME development comes in various types, but our main focus will be based on “Ansoff Model” as a growth a growth strategy.

Reason why one needs to think of a Growth Strategy

The most important part for small businesses to focus on is the growth. We have conducted a research on why most businesses only last for like two years, the statistics shows the following:

About –

  • 66% of start-ups fail within 2 years
  • 49% of start-ups fail within 4 years
  • 39% businesses fail within 6 years
Failure Rate

Research shows that most businesses are going to fail, the main cause of this major fail is due to the “lack of foresight” or the small businesses not being able to invest in and focus on growth strategy.

Most small businesses are operating  just to survive. They make no profit, every money they make is spent on their needs. Overtime the businesses financial flow becomes still. When they find themselves stagnant, they are just happy to be able to survive.

Subsequently, when the industry changes; new businesses are introduced, market force is shifted, we are able to see these failure rates because some SMEs find it hard to adjust causing them to fail.

Ansoff Model as a Growth Strategy

This model is a master plan used to expand an organisation’s growth strategy. An organisation can take on these four various types of strategies:

Growth Strategy: For Small Business SME using Productivity Tools
Growth Strategy
  1. Market Penetration
  2. Product Development
  3. Market Development
  4. Diversification

Normally before the business is initiated, an SME should determine the marketing strategy. This strategy is associated with how the organisation is established and the way it choose their target market. The selected strategy influence the risk and winnings that the organisation faces.

Market Penetration is a strategy with less risk than any other strategy although Diversification is more risky. However, the greater the risk, the bigger the reward.

Market Penetration

This strategy works best within market that is already in action with existing products. We define this as something that not most SMEs can do because it requires the company to be operating already with a product and good market in place.

This is the best strategy for a business that is already in action and looking for ways to grow their market share. For example:

  • Ongoing specials, applying low prices to apprehend a bigger market share
  • More advertising
  • Improving sales efforts, hiring more people to push sales

This strategy is all about focusing more on what is already working to make it even better

Product Development

This is mainly the development of a new product in  a market that is already in action(existing market). This usually happens when the business has used all their market penetration options and then come up with a decision to launch a new product for the existing market to expand the business.

This strategy carries a medium risk, however it is easy to apply within a strong clientele. Let me make an example of a payment processing business, assuming you already have a clientele that uses your system more often to collect payments from their customers. You might think about initiating aa financing business, like the way Yoco did with launching Yoco Capital. They have established a new product but within their current market span.

Market Development

This one is all about introducing a new market into a product that already exists. Let me make an example of a grocery delivery app to deliver around Joburg. This is environmentally restricted because of the trucks used to deliver or scooters within that location. The owners of this business could decide to grow and introduce this business in Cape Town, this means that they will have to grow and get new delivery routes, delivery trucks and so on. This could cost a lot but it also comes with greater benefits in the end.

The owners might want to check how their business became a success in Joburg and apply the same strategies when implementing the business in Cape Town. This is more like having more branches in different areas.

This development is not limited to only geography, YouTube for Kids is also another great example of Market Development. YouTube grew their business by introducing a new market division of children to be specific.


Most small business fit within this strategy. This strategy is all about manufacturing a new product and also making a market for it. Research has indicated that up to 97% of SMEs examined did use Diversification Growth Strategy.

The research also indicates that SMEs do not always have plans/strategies in place to grow their market. First great step is to understand the strength and weaknesses of your business.

SWOT Analysis

In full, SWOT stands for:

  • Strength
  • Weaknesses
  • Opportunities
  • Threats
SWOT AAnalysis

Once you have found where you understand as a business, then yo can start with developing your growth strategy. Skhokho Business Management Software is a Strategy Developing App that gives you the ability to write on your SWOT analysis for your business.

Then implement your business strategy and growth strategy before you move to the next phase of noting an measuring your objectives to obtain your strategic targets.

Success Measure using OKRs

Having strategy sessions at the year end getaway is not enough because after a week later, everyone can’t remember what their goals were and waiting for the next review session. OKRs are specifically developed to be dynamic in enabling your company to note, track, measure performance of business goals and targets.

Start using OKRs on Skhokho with a 14 day free trial.

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