Large profit margins in any small business depend on its strategies, without which it will incur losses and, worst of all, untimely closure. A small business strategy acts as the blueprint of decision-making and implementation of all aspects of the business.
The strategy that businesses implement depends on their financial abilities, position in the market, and government regulations. In this article, you will learn the different strategies, marketing approaches, modules, and their importance.
What is Small Business Strategy? Overlook the Many
A small business strategy is a combination of decisions and actions that a company implements to achieve its set objectives. It’s a clear definition of what a company ought to do with a clear pathway towards its achievement. Price, promotion, and differentiation are some of the strategies this article will cover.
Why is Small Business Strategy Important?
You cannot overlook the many advantages of having a solid business strategy for your business. There is so much attached to the small business strategies as outlined below.
As a small business owner, strategies give you full control and understanding of the pathway you need to follow. With such an approach, it’s easier to achieve the set objectives.
Strategies aid in evaluating, identifying, and allocating resources efficiently. Your business is better positioned to eliminate weakness and capitalize on strengths through the allocation of resources to the most productive activities.
The aspect of proper planning comes in handy if there are strategies in place. Proper planning gives your business a competitive advantage to ensure it thrives despite the stiff competition.
The Module of Small Business Strategy
The module of a small business strategy is the general combination of principles, major concepts, and the analytical approach used in decision-making. The module of the business strategy narrows down to three basic strategies.
Three of the basic strategies included the differentiated product/service strategy, cost strategy, and focus strategy.
- Differentiated Product/Service Strategy
Product or service differentiation involves selling uniquely crafted products with unique features. The prices of such are also high, but due to the value they offer, customers don’t mind paying the prices.
Small businesses thrive not because of the high prices but because of the unique services and products that their competitors are yet to avail themselves in the market. It’s important to note that it’s an unusual approach, which may not always work.
- Cost Strategy
It’s an approach suitable to businesses that have attained economies of scale, where the low production cost is transferred to consumers. The low production cost is majorly due to efficiency in production. Despite the low costs, small business owners should appropriately price their products for better profit margins compared to their competitors.
- Focus Strategy
It’s a hybrid of the other two strategies where a business aims at offering differentiated products at cost-effective prices. The business has to be good at both to ensure the approach is successful. Understanding the needs of particular customers is the prevalent factor to succeeding in this approach. A good example is capitalizing on the middle-class population in urban settings with differentiated products at reasonable prices.
Small Business Marketing Strategy
Marketing strategies for small businesses aim at acquiring new markets, penetrating them, and retaining customers. These are the essential aspects to grow your business, make profits, and remain relevant in the market.
However, it’s vital to note that there is not a single marketing strategy that that does all the magic. For a marketing strategy to yield the desired results, it will depend on the customer base, demographics, consumer pain points, among others. Therefore, as a small business, you will need to do research on where your customers hang out before settling on a marketing strategy. Below are some marketing options a small business strategy can use.
Content Creation and Marketing
It involves the creation and distribution of the most relevant content consistently to the target audience in your business. Its main goal is to address customer pain points and how the products or services can solve their problems.
Its results are long-term and when you create quality content. Quality content involves optimization for both search engines and humans. Relevance and consistency in creation and promotion are other vital factors.
Email marketing is one of the easiest to use, cost-effective, and result assured marketing methods.
This small business strategy is the best way to sell after compelling your visitors. It has the highest conversion rates compared to other funnels.
Some of the possible ways of compelling your visitors to buy include offering trial services, free downloads, and free coupons. It comes with advantages like easy setup, automation, tracking and segmentation, global reach, and immediate communication.
Listing on Google My Business
Listing on Google My Business is among the most effective ways to market a local business.
After listing your business, ensure it ranks on GMB. It’s effective because, on the search results, GMB listings come after the paid ad, after which organic search results follow.
High ranking directs quality leads, reducing your need to use paid ads. It also centrally avails all your information on different Google platforms. Such gives your business better visibility, and your customers don’t doubt your credibility.
Advertising on Social Media
Social media marketing is an effective yet cheap way to advertise your business to virtual audiences. Facebook is the leading advertisement platform, followed by Instagram. However, depending on your type of business, either can comes first.
Adverting on Facebook involves four simple steps. They include creating an eye-catching headline, a brief description, adding an image or short video, and finally incorporating a link.
Use of Google Adwords
Adwords are the best marketing strategy for any online business. They have been around for the lost time, and they work perfectly in delivering perfect search results. It’s, however, important to note they are very expensive.
The quality score of your Adwords depends on its Click-Through Rate, which is determined by the relevance of your landing pages. Unlike other marketing strategies, you can use them alongside other marketing strategies to achieve better results. For this, approach the higher the input, the better the results.
Webinars are online seminars that your business can use to demonstrate and present how a particular product or service works. They have proven to produce good results in generating lead magnets.
With the help of email marketing, they can help create a huge list of subscribers from the credibility gained through the webinar. You can also record the webinars to act as an individual or supporting the product to what you offer. However, it’s advisable to test the waters with one of your target audiences to determine if this strategy will work.
Offering staff incentives is a small business strategy that will work well because nobody knows your services or products better. Incentives can be financial, vouchers, days offs, or any other option that intrigues your staff.
The referrals from your staff can increase your customer base, which directly increases your sales and profits. Incentives can also include training and offering tools that can enhance the easy marketing of your business.
Utilizing Coupon Sites
The use of coupon sites as a small business marketing strategy requires extreme caution and proper strategy. In most cases, your main aim should be increasing the visibility of your business rather than sales or profits.
The sites require you to offer your products at over 50% discount, and they will take half of the revenues. With this alone, you are bound to make huge losses if many customers take up your offer. During the sale, your customer services should be top-notch to avoid creating a bad impression.
Identifying and collaborating with local companies or business puts you in a better place than working alone. There are more your business gains from partnerships like client referrals and mutual complementary benefits to both partners.
Partnerships can also be effective with non-competitor businesses because it’s easier to take advantage of the audience to promote your business.
Free Consultation Promotions
It is appropriate to try free consultation if you run a service-oriented small business. Most people will be willing to pay for more information after proof that your services are worth paying for. Despite this being the case, most professionals fear that their audience will run with the information they acquired during the consultation.
However, most professionals have noted increased revenues from their audience who commit to getting better advice or consultation of other services.
Joining Business Groups
There exist general local business groups and specific niche groups as well. From such, you can interact with like-minded people, get referrals, network, and create new opportunities. This can lead to new partnerships increased customer base, among other profitable interactions with your business.
Eight Business Strategy Examples
Businesses employ different strategies for their expansion and growth. However, there are some approaches a business must use to acquire, penetrate and grow its market share. Below is an outline of eight of the most basic ones.
1. New Feature/Product Growth Strategy
Adding new features or products to the existing ones helps small companies retain and increase the number of customers. This is applicable to smartphone and electronics companies, without which customers move to more advanced technology provided by competitors.
2. Competitive Advantage Acquisition Strategy
An acquisition strategy is a small business strategy where a business utilizes its extra income to purchase a competitor’s business. In some cases, it’s part of a product line. For example, a company may buy the cosmetic line of its competitor to reduce completion or increase the sales of its products.
3. Price-Skimming Strategy
It is a Small business strategy where small companies sell new products at exorbitant prices. In such scenarios, their main aim is to recover production and advertisement costs before competitors can offer similar products.
The latest technology is a perfect example, and in most cases, it works because the company enjoys monopolistic advantages.
4. Market Accusation and Penetration Strategy
The deliberate search for new markets for a company’s products is a strategy that enables it to increase its scope. In some cases, though, during the search, they are likely to land a market that it’s yet to exploit fully. Such opportunities will enable the company to increase its sales and general growth as well.
5. Product Differentiation
Product differentiation is among the small business growth strategies where individual businesses capitalize on branding. It, however, doesn’t stop at branding but also gaining the loyalty of customers.
With customers loyalty to a particular brand, the company sets its self-apart hence beating its competitors.
6. Promotional Strategy
The promotional small business strategy aims at making more sales without necessarily acquiring new customers. Usually, this is through increasing cart size or the number of products per customer.
It’s an efficient strategy in service industries like banks. Online retailers and office equipment suppliers can make good profit margins as well.
7. Market Expansion Strategy
This strategy entails finding a new market for existing products because of the saturation of the current market. It gives room to make more sales, unlike their current market, where growth is already limited. The business can also find alternative use of its products during the search.
8. Diversification Strategy
Diversification is a risky strategy that requires the company to do thorough market research on the new products and market. It involves selling new products in new markets. The research will ensure the new customers like the new products for it to yield results.
The Bottom Line
Success in any small business depends on how its small business strategy is implemented. The marketing approach will also determine the success of the strategies in place. Thus, it’s crucial to carry out thorough market research on your target market before you settle for a marketing or business strategy.