How to identify useful opportunities for your business growth

Growth is a tricky business. Companies must continuously strive to identify new growth opportunities to achieve long-term business success.

That’s why it’s important for your business to develop new knowledge that will ultimately help generate ideas that the competition failed to see.

This interesting topic is what we discuss in this article, as follows:

Ideas are the backbone of business

Ideas range from big and clever to small and modest, and they are the backbone of business, so nothing should be dismissed out of hand.

Sometimes a slight change of angle is all it takes to turn an idea into a viable proposition.

Investing in a robust “innovation frontline” process—the initial activity of generating and shaping ideas—improves both the quality and quantity of the ideas you generate, and keeps everyone involved engaged.

So how do you turn those wishful thinking into opportunities for real growth?

Start with market research

The first step is to make a short list of your competitors, and market research is very important here.

The more you learn about your competitors—what they sell, where, and to whom—the clearer your picture of whether you’re competing in the same space, or missing out on growth opportunities they haven’t seen.

Modern research goes far beyond a competitor’s spreadsheet: digital tools, customer reviews, social listening, and search data all help reveal what people really want and where the gaps are. (More on putting AI and data to work below.)

Four growth strategies: Ansoff Matrix

Once you understand your market, it helps to think about growth in a systematic way.

One of the most enduring tools in this regard is the Ansoff Matrix, developed by Igor Ansoff in 1957.

It sets four growth strategies against two variables—your products and your markets, each existing or new—ranging from low to high risk. (Don’t forget to figure out how to manage that growth, too.)

Market penetration: existing products, existing markets

Increasing market penetration is probably the least risky growth path—although risk is always relative.

It is considered low risk because you are dealing with known factors: your existing products and your existing markets.

Vigilance is carelessness. If you don’t see changes around you, such as new products and services from competitors, you can miss the changing needs of your customers and end up losing ground.

Market development: existing products, new markets

Market development means selling your existing products in new markets.

It carries more risk than entering a market, because expanding into a new market can involve investment without the guarantee of a profitable return.

But because you use existing products, there are no product development costs, which helps keep risk down.

Product development: new products, existing markets

Sometimes called product or service innovation, this means introducing something new to the customers you already have.

It requires an investment of time and money, and you may need to train staff so that customers can get the best advice on a new product. The key is an in-depth knowledge of who your customers are and what they need—focusing on existing customers allows you to learn which offers will work best.

And not every new product or service requires a large investment.

Diversification: new products, new markets

Diversification is often seen as a very risky strategy: new products and new markets at the same time, so you have no knowledge of the product or potential customers.

The upside is the first advantage—if no one has met this requirement before, you can position yourself as a leader ahead of the competition, which often allows you to charge a premium.

Make AI and data part of your process

Whatever strategy you choose, base your decisions on hard data rather than gut feeling. It significantly improves your chances of success.

What has changed since this article was first published, back in 2018, is how much data even small businesses can access, and how much analysis can be automated.

AI tools, in particular, can bear the brunt of innovation:

Market and competitor research: summarizing reports, tracking competitors and compiling a market picture much faster than doing it manually.
Customer details: analyze reviews, support tickets, surveys and social media to reveal unmet needs and ongoing problems that identify opportunities.
Conceptualization and assessment: acting as a sounding board for expanding, refining and stress-testing ideas before committing resources to them.
Prediction: modeling need, price and cash flow scenarios so you can compare your options with more confidence.

There are two caveats, however.

First, AI works best alongside real conversations with customers, not in place of them—patterns are more than tools, but judgment and direct communication still determine what to follow.

Second, your insights are only as good as your data, so it’s worth getting your basic numbers—sales, costs, customer experience—clean and in one place.

Good accounting and business software makes that very easy, and increasingly comes with built-in analytics and AI features.

Build the right team

Even the best growth strategy needs the right people behind it. As you grow, you may need to hire to meet additional needs. But don’t just fill a skills gap. Look for people who will thrive in your culture and add to it, not just those who tick technical boxes.

Employment has changed in recent years. Many roles are now hybrid or remote, which expands your talent pool beyond your local area, but also means thinking more about how culture, communication and collaboration work in a distributed team.

Skills shortages in a number of sectors have made the best people hard to find and retain, so it pays to be clear about what makes your business a great place to work.

But employment is only part of the picture.

Put people management processes in place to retain new and existing employees, so you grow together as a team rather than being hired. And don’t neglect the talent you already have: at the current pace of change—AI included—skilling and developing your existing team is often faster and cheaper than hiring from scratch, and it helps people feel invested in where the business is headed.

Look at your finances

If you have plans on the table to pursue new opportunities, take a close look at your finances. As we’ve covered, you may need more money to pay for new products or services you’re taking to a new market.

Make sure your finances are in good shape and stay on top of your cash flow. Keeping everything running smoothly frees the business to focus on its growth goals.

And remember: whether you’re looking for super-fast growth or a slow, steady path, the same thinking and planning still applies.

A combination of sharp insights, sound data, the right team and healthy finances is what turns an ambitious vision into sustainable growth.

Final thoughts

Growth doesn’t mean taking big risks or reinventing your business overnight.

Often the strongest opportunities come from looking closely at what you already have—your existing customers, your products, your data—and asking where the gaps are.

The Ansoff Matrix gives you a framework to think about that in a systematic way, and AI is now making it much easier to do research and analysis that used to take weeks. Of course you can easily combine these two things together by asking AI to apply Matrix to your business.

Whichever approach you choose, the bottom line remains the same: understand your market, support your decisions with data, invest in the right people, and keep your finances in good shape.

Businesses that grow continuously are not necessarily bold. They are the ones who plan well, take decisive action, and continue to adjust as they learn.

This article was originally published in January 2018 and has been updated for relevance.