Lesson 5: Growth Strategies

 
 

Prefer to listen to this lesson? Click below:

Workshop Scenario:

Please think of yourself in the following scenario as you complete this workshop.

You have spent your entire career working in corporate environments, but you've always had a burning desire to start your own business. You recently had an idea for a new business that you're passionate about, but it's in a completely unrelated field. Despite lacking experience or expertise in this industry, you're determined to make your vision a reality. You feel certain that your business idea can be profitable while making a positive impact in the community.


After considering all possible options for funding your business idea, you’ve landed on the best financing source for your new company. You need investment, but is your business even scalable? You want to guarantee the long-term success of your business model, so you must research how you can grow it. How will you mitigate the risks of scaling and ensure peace of mind for your investors?

Lesson Objective:

By the end of the lesson, you will be able to evaluate the scalability of your business idea by considering the associated risks.

Important Questions to Answer While Reading:

In order to be successful in this lesson, you must be able to answer these important questions.

  1. What makes a business scalable or ready for growth?

  2. What are the potential risks associated with scaling a business prematurely? How can they be mitigated?

5.1 - Scaling a Business

Scaling a business as an entrepreneur involves increasing the size, scope, and revenue of the business while maintaining its efficiency. Some businesses and industries are more scalable than others. Knowing if, when, and how to scale is key to the longevity of the business. Below are some questions to ask yourself prior to considering scaling your business:


  • Can your business grow without requiring significant additional resources such as time, money, or personnel? Can your business maintain its profitability while expanding its operations?

  • Are your products or services easily adaptable to new markets or customers?

  • Is your business model easily repeatable? Can it be replicated successfully in new locations or markets?

  • Are there any barriers to entry that could prevent competitors from entering your market or replicating your business model?

  • Can you leverage technology to automate or streamline your business operations and increase efficiency?

  • Is there a significant demand for your products or services, and is that demand expected to continue to grow?


    One example of a successfully scaled business is Amazon. Amazon started as an online bookstore in 1995 and has since grown into a multinational e-commerce company that sells a wide range of products, including books, electronics, clothing, and more. Over the years, Amazon has expanded its business model to include other products and services, such as Amazon Prime, Amazon Web Services, and Amazon Marketplace.

5.2 - Developing a Growth Strategy

If scaling the business is the right decision for your company, you must then consider potential growth strategies. These provide a framework for making informed decisions, identifying new opportunities, and positioning businesses for long-term success. Here are some examples of strategies to expand your business operations:

  1. Market Penetration: Increase sales of existing products or services in current markets through marketing campaigns or promotional offers.

  2. Market Development: Introduce existing products or services into new markets by expanding geographically or targeting new customer segments.

  3. Product Development: Create new products or services to sell to existing customers. 

  4. Diversification: Expand the range of products or services offered by a business. This may involve entering new markets, acquiring or partnering with other businesses, or investing in new technologies.

  5. Acquisition: Acquire other businesses to expand operations and increase market share. This can be a fast way to grow a business, but it can also be risky if the acquired company doesn't fit well with the existing business.

  6. Franchising: Franchising involves expanding a business by granting licenses to other entrepreneurs to operate under the company's brand name and business model.

    Businesses may use just one or a combination of these strategies to grow. Scaling is risky and can lead to cash flow problems, loss of quality control, staffing issues etc. if not done properly, so it's important to consider risk management while planning.

Lesson 5 Assessment:

Now that you have reached the end of this lesson, please respond to the following:

  1. Evaluate the scalability of a business you are familiar with based on the criteria outlined in the lesson. 

  2. Describe one potential risk of scaling a business. How can it be mitigated?

Participate in the 24/7 Discussion Forum

Please answer the following prompts in the comment section below and interact with learners from around the world:

  1. Evaluate the ethical implications of scaling a business rapidly. How can businesses balance growth and social responsibility?

  2. Compare and contrast the advantages and disadvantages of franchising versus acquisition as growth strategies. How do these strategies differ in terms of risk and long-term success?

Created by 24/7 Instructional Designers: Laura Campion & Vivi Ma

24/7 Teach1 Comment