Before investing in market growth, ensure your company is ready to withstand the risks and has a strategy in place.
Strong organic market growth is a key indicator of a business’s health and longevity. Research conducted by McKinsey at the end of 2021 revealed that 55% of business leaders consider building new business a top three priority — almost twice as many compared to 2018 through 2020.
The increased focus on organic business growth among c-suite leaders may often stem from a desire to position their companies for future success. The same study showed that 80% believe that building new business will help companies overcome shifting customer demand and economic disruptions. Meanwhile, 62% are looking to diversify their business by investing in a new offering.
Diversifying your offerings and markets is understandable after the past few years marred by shifting economic challenges, supply delays and shortages, and evolving customer preferences. But growth also comes with inherent risk. Even with sound strategy and fully optimized operational practices, there remains a risk of failure, whether because of low buyer demand, competitor offerings, or other market factors beyond your control. Consequently, some firms may find themselves faced with any number of missteps, including:
- Targeting the wrong markets for expansion
- Investing in new offerings with limited viability
- Overextending their money and resources
- Making other costly mistakes that could harm their core business
Despite all of this, organic growth remains imperative for businesses to ensure their longevity. Here are three steps for pursuing their organic business growth goals while minimizing — or at least mitigating — risk.
Have you settled on a path for growing your business? Make sure you understand the market before you invest with these 5 Tests for Market Growth.
Ask yourself (and answer honestly): Are you ready for market growth?
While business growth might be your company’s number one desire, you first need to determine whether you’re ready to make that investment. So, what does readiness look like?
As you consider investing in an organic business growth strategy, keep the following questions in mind:
- Is it time to grow or to play it safe? Is your company in a secure state to invest in growth, or should you instead focus on securing your core market?
- Are you growing for the right reasons? Are you growing because you’ve discovered a clear and attainable opportunity your company, or are you stretching your company to reach for a blue-sky opportunity that may not be the right fit or the right time?
- Will you grow at the right pace? Are you taking a measured approach to growth and allowing yourself time to assess and evaluate the direction of the endeavor, or are you going all in without the proper due diligence?
- Have you chosen the right opportunity? Have you investigated all potential options for growth to determine the right one to pursue, or are you investing in the first idea that resonated?
Look Before You Leap: Market Analysis
If you feel confident in your plan for organic business growth, your next step should be a thorough analysis of the market you intend to target. The decisions that drive growth are among the most important your organization will make, and nothing is more important to these decisions than a strong understanding of the market you’re targeting.
Knowing which products and services to sell, where to sell them, and how to expand your offerings in the future is the foundation of a solid growth strategy. Without this information, companies can only guess which paths to expansion have the most potential, which increases their risk of coming up short in revenue. In fact, 70% of businesses struggling with growth make decisions based on instinct and experiences instead of data. On the other hand, 78% of business leaders said using data to inform growth strategies resulted in increased revenue.
This is where market analysis can play a crucial role. The process of market analysis identifies the most promising markets for your offerings, the best ways to grow your catalog of products and services, and more. This comprehensive, data-focused assessment of market environments gives your company the necessary insight to protect your investments and your core business. It’s important to keep in mind that the goal of market analysis isn’t to simply gather data: It’s to gather the insights that are most relevant to your company’s needs, allowing you to make informed decisions.
Make it intentional: Organic market growth without a solid plan is just luck
Once you’ve performed a thorough evaluation of your target market — and identified that it’s the right investment for your company — it’s time to develop a go-to-market strategy. Luckily you already have a wealth of insights gathered from your market analysis to build from.
At this stage you’re looking to develop more tactical plans that evaluate the market in depth and identify not only how your company will fit in, but how you will stand out. This includes assessing factors like:
- Competitors and key players
- Competing and adjacent products or services
- Sales channel trends
- Key customer segments
- Pricing strategies
With these insights, you’ll be able to build a competitive offering that will allow you to establish or increase your position in the market.