Many great ideas fail to translate into profitable business opportunities. Often the reason is the perceived lack of opportunity to compete with large, established brands that dominate a category.

However, real life facts shows that the small, independent, family owned business can successfully survive and thrive in mature categories.

In Fact small businesses are at the core of any economy. For example, according to this report, small businesses were the mighty engine that lead the US economic recovery.

If you have a great idea but are stuck on how to market your new small business, here are three essential strategies for success.

Be A Specialist

Probably the most common marketing error large companies make is stretching into various categories totally unrelated to what made their brand successful in the first place. Publicly traded companies in particular are heavy users of this strategy.

In order to market your new business successfully you have to adopt the opposite strategy: focus on one thing, and do it very well. The narrower the focus, the better the chances of getting uniquely positioned in your customers’ mind.

Let’s take a look at sports apparel, a category dominated by giants like Nike and Adidas.

Airwalk  managed to build a strong and profitable brand by focusing on one sub-segment for which it become the brand of choice: board sports.

One quick Google search for “yoga apparel” will reveal the number one brand in the niche: Lululemon Athletica. A narrow focus, a premium-priced product and great community building programs were the key ingredients of its success.

Be Fast To Adapt

An adaptive company tweaks its business model with the changing times. This requires great vision and timely decision making.

A notorious weakness of big companies is the slow decision making process. As companies get bigger, new layers of management are added, which moves the approval process to smaller specialist teams that have to come to an agreement for the common good.

Today’s super competitive environment combined with fast and often unpredictable changes in consumer preference, makes timely decision-making a strong competitive advantage. That means new products can be brought to market faster, existing products can be quickly improved to respond to evolving needs, and new communication tools can quickly be established.

The key here is an in-depth, almost personal knowledge of your target audience. Once you notice an emerging trend be the first to embrace it and your brand will be a winner.

Be Personal

A small business is about “putting a face” to the person you’re dealing with: your employees, suppliers and customers. By default a small business is more “personal” in nature than a big corporation.

Make sure you build on this positive perception your customers have about your small business. Answer your clients’ questions personally. Be involved in your community. Support a cause your customers value.

But more importantly, have a compelling brand story.

One of the most important piece of information on a small business website is the copy on the About Us (or Our Story) page. And I will use the Canadian electronics retail space to illustrate this concept.

The Canadian electronics retail space is divided, like in most categories, between big box retailers (Future Shop and Best Buy) and smaller, independents such as Bay Bloor Radio.

Let’s get more familiar with the two brands, and what they stand for. What would you rather read, Bay Bloor Radio’s amazing story or their big box competitor Best Buy’s Investors page?

These strategies to market a new small business will give you a head start and create the desired perceptions about your brand. But as Steve Jobs once said: “Everything is important-success is in the details.”

You also need is a consistent and timely implementation plan, which requires discipline and know-how. Because “Strategy without tactics is the slowest route to victory” (Sun Tzu, Chinese General).

Otherwise the big guys will catch up, and you will have to start all over again.

Image Credit: Anirudh Koul on Flickr

Business owners have one (big) expectation from Marketing: to dentify strategies and implement programs the lead to business growth.

The number of Facebook fans, e-mail open rates, number of visitors on the website- these are meaningless statistics without a quantifiable impact on the bottom line.

I am not saying these metrics are not important. It’s just that we need to find ways to translate them into positive sales results.

How To Generate Business Growth

Simply put there are basically four ways to grow your business:

-sell more existing products to existing customers

-sell more existing products to new customers

-sell new products to existing customers

-sell new products to new customers

The ideas below fit one or more of the four strategies above. Not all of them will be applicable to your business, so use this list for inspiration only.

10 Way to Grow Your Business

Launch a New Brand

Many consider this business growth strategy only when the existing brand(s) are struggling. However this is not always the case.

Lululemon Athletica is a well known designer and marketer of yoga-inspired athletic apparel. The brand basically owns the Canadian yoga apparel market, by offering a distinctive product line backed by a strong community-focused marketing approach.

In 2009 the company decided to leverage its expertise and target a different, younger audience. That’s how Ivivva Athletica was born as a line of “dancewear and activewear for girls”.

There are a lot of scenarios where launching new brand makes sense:

-the company wants to enter a new market segment where the current brand image cannot be leveraged.

-existing brand has become irrelevant as consumer needs are changing. Kodak was the leader in film photography,  but the brand could not be stretched and adapted to the digital photography revolution.

-price pressure from new market entrants. This is a scenario that many premium North American brands are having to deal with as they  face intense competition from imported products.

Many companies choose to stretch the existing brand into the new category (brand extension). The safest option, while more time consuming and expensive, is to launch a stand alone brand with a meaningful positioning in the new category.

Expand Internationally

Today’s global economy makes it easier for brands to expanding beyond their national borders. Depending on the product offering, and with the help of today’s technology, a company can expand internationally with much less investment than even 5 years ago.

The Internet is an invaluable tool for researching various trends and attitudes of the international market you are targeting.

Most governments have programs in place to help companies expand their reach globally through financial support, market research data and even joint trade missions to specific countries. Check out my article on global marketing for further information.

Identify and Target Complementary Markets

The first step when pursuing this strategy is to ask a simple question: “What business is my company in?”.

An insurance company might provide the following answer: “We are in the business of selling insurance products such as life, home and auto insurance to our customers”.

This is a very simplistic answer that does not enable business growth.

When answering this question, one has to think of the following: “What client needs does my product/service addresses?”

“What benefit do my clients seek for when buying my product?”

Coming back to our insurance company example, one answer might be “we are in the business of providing our customers with peace of mind by having them covered when the unexpected happens”.

This much broader definition allows the development of additional products and services for a market where “piece of mind” is a valued benefit.

Launch a New Distribution Channel

If you feel the current distribution channel does not provide the much needed business growth, then it’s time to revise your  strategy. This process might present some challenges, so careful planning is required.

The most common obstacle is channel conflict. A company that has built its business selling through independent distributors, might have a hard time making drastic changes.

Distributors want exclusivity and don’t like competition, in particular from the online channel.

The reality is that modern consumers have many shopping options: some of them prefer brick and mortar stores where they can touch, feel, and try the product before buying it. These “traditionalists” will be loyal to that channel, no matter how tempting the online channel is, and is willing to pay a price premium for this privilege.

Others prefer the convenience of buying online, in which case the distributor will not get that business anyway.

With careful planning and integration, using multi-channel distribution system should help a business improve its bottom line.

Implement a Loyalty Program

If you are not convinced of the benefits of implementing a loyalty program, check out these interesting facts.

A loyal customer base is a characteristic of a strong brand.

Besides encouraging repeat purchases, a loyalty program allow brand owners to influence customers’ buying behavior,  identify purchasing habits, and a positive brand image through word of mouth.

A common perception among small business owners and new entrepreneurs is that loyalty programs are for big budgets only. This is not the case as there are companies offer online loyalty platforms that fit most marketing budgets.

Focus on the End-User While Keeping Distributors Happy 

Independent distributors are rarely loyal to a particular brand. They are in the business of making money and, unless their customers ask for a specific brand, will push whatever brand brings them the most profits.

Many companies that sell through distribution use e PUSH strategy exclusively.  They are afraid that distributors will not be happy if communication campaigns are directed at end users.

However brands are built with the ultimate beneficiary of your product, the end user. A joint programs with distribution to target the end-users could be the win-win solution. You bring more business to distributors while selling your products in the process.

Invest in Your Brand Image

We feel most comfortable with people we know. As consumers we tend to choose brands we are familiar with.

Investing in marketing programs that creates awareness and demand for your brand a proven method to grow sales.

While word-of-mouth recommendations is the most desirable outcome of your communication efforts, gaining people’s confidence happens slowly over time. Social media is a great way to establish one to one dialogues with your customers and transform them in brand ambassadors.

Develop New Products

New product introductions is a classic method of generating business growth. The most successful and profitable new products dramatically enhance performance within an existing category or create a new category.

Even existing products in the brand portfolio that customers are not aware of could also be considered “new”. Take a look at products that were introduced 2-3 years ago but didn’t gain much traction. The solution might simply be a revamped communication strategy.

A new product launch reignites the dialog with your customers and energizes your sales force. They offer a reason to call back on old customers with exciting news.

Explore Co-Branding Opportunities

Developing a product or service is partnership with another brand can offer a significant boost in sales. Co-branding, carefully planned and executed, will provide positive results for both brands involved in the process.

There are many benefits of using this strategy: exposure to a complementary market your brand doesn’t currently serve; positive brand associations; reduced product development costs; and lesser risk associated with a new product launch.

On the negative side if the partner brand goes through an image crisis, your brand will probably suffer as well.

Co-branding has to make sense in order to work: the partnership between Intel and big computer makers such as IBM under the “Intel Inside” campaign was a huge hit, as the two brands complement each other.

Franchise Your Business

A popular strategy for expanding the brand rapidly and cost efficiently into different geographical markets is by franchising it.

Not all business can be franchised: in many instances, a particular business model is location or staff dependent and cannot be replicated. That being said, franchises bring benefits for both the franchiser and franchisee.

The initial franchise fee and on going royalty certainly improves the bottom line. These funds can be used to promote the brand and build a more desirable franchise.

The franchisee avoids the higher costs of having to build a business model and a brand from scratch. Initial training and ongoing support also increases the chances of success.

In the end a good fit between the two parties is essential to success.

Your Thoughts On Growing a Business

This list is by no means comprehensive. I am sure you have your ideas and experiences.

Feel free to share them with us in the Comments section below.

Year-ends are usually times of reflections and planning. Setting next year’s marketing budget follows the same process: looking back at this year’s accomplishments and defining next year’s goals and resources.

“What should the marketing budget look like next year?”

That’s the big question for which there is no easy answer.

Coming up with a marketing budget is just half the battle. Getting it approved by senior management requires a well-planned strategy.

Look at The Big Picture

Setting a marketing budget begins with answering a few questions:

• What are the major strategic goals for next year? How many of them can I realistically accomplish?
• Who is my target audience? What are the best communication methods to reach them? What is their level of brand loyalty?
• How difficult is it to reach my target audience? How easy it is to track their actions and reactions?
• Is the category my brand operates in  highly competitive, with many brands fighting for market share?
• How strong is the competition? How aggressive is my competitors’ marketing?
• What is the budget amount the management team feel comfortable with? (I realize that in some cases this is difficult to assess, but there are ways to do it. Look at past years’ approved budget and have preliminary discussions about their vision and plans for next year.)

How to Set Your Marketing Budget

Below are some of the options you can use to come up with the optimal amount for your next year’s marketing expenditures.

A Percentage of  Revenue 

Many companies set their marketing budgets by allocating between 1% and 10% of their revenues to marketing.

This method assumes a direct relationship between revenue generation and marketing. In many instances this is not the case.

For example, launching a new brand usually requires  important marketing resources, while the revenue it generates is zero.

Check out this 2011 report for some insight on the advertising expenditure as a percentage of sales in various industries.

Marketing Budget History

A detailed look at last years’ budgets versus the accomplished goals offers marketers a good idea of where they need to be in the year to come. If the management team is happy with the accomplishments then these budgets represent a solid starting point for next year.

If major strategic changes are to be implemented then previous budgets might not be relevant. This is also the case for new companies (brands) with no marketing budget history.

Task-Oriented 

One simple way to set the budget is to tally up the costs of all marketing activities planned for next year. The total amount gives you the market budget for next year.

One thing to keep in mind is that obtaining accurate costing from various vendors in advance might be challenging. Another downside is that this method does not offer much room for adjustments in the strategy during the year.

Competition-Oriented

Matching what your competitors are spending is another way of establishing your marketing budget. The assumption here is that if you want to remain competitive you have spend as much as them.

There are a few challenges here. Firstly this information might be difficult to find, depending on the industry. Moreover, there is no way to know if the number made public is accurate or not. And thirdly, you might be able to use your budget more efficiently, and get more done with less money.

If you want to know what industries are the highest spenders check out this report. You can also see who the top 100 US advertisers are here.

Random Allocation

This method is more popular than you might think. Used mostly by companies for which Marketing is an afterthought, this methods follows no plan and requires no justification. In this case the Management team (or the owner of the business) randomly picks up a number he/she is comfortable with.

This method inhibits any strategic thinking and planning. My advice is to avoid it if you can.

A Hybrid Method

My favorite method makes use of many principles outlined above to come up with a realistic marketing budget.

This approach takes into account the business as an whole, rather than the specific needs of an individual department. It also looks at the competition and, most importantly, how much you can realistically afford to spend.

Setting the Marketing Budget: Track Every Penny

There are some many ways to spend your marketing dollars, depending on your marketing goals. One thing is certain: it’s much easier to set a marketing budget and justify it if you are able to track the effectiveness of its allocation.

I personally review the dollar amount spent on each project against its goals.

The other thing I do is not rush to conclusions: I give each new marketing initiative at least 2 to 3 years to justify its existence. Some tools, such as social media and e-mail marketing are a try, learn and adjust process, that need time to prove their effectiveness.

Some initiatives are easier to track than other. However you should do your best to measure the actual performance against the expected results.

I am interested in learning about the method(s) you use to set your marketing budget.

Making your offering available to more customers is one of the most solid growth strategy. Many companies get stuck with the same distribution model for decades, although it might be obvious that a change is needed. The most common reason given: channel conflict.

Distribution partners don’t like competition. They want exclusive products and always better prices. In the case of family-owned businesses distribution has been built on personal relationship so the decision to expand is even more difficult to make.

Why You Should Revisit Your Distribution Strategy

The increased popularity of  some channels such as big box stores stores and the Internet has left many Brand Managers wondering if they are missing an opportunity to reach more customers.

Challenges such as the rise in popularity of distributors’ private labels or the lack of sophistication of some channels make the issue of finding alternative channels even more pressing.

Below are some opportunities to try alternative distribution models and assess the impact on the business:

Reason 1: The Company Enters a New Market

If you decide to explore a new market that the existing distributors do not service, you have the perfect opportunity to start fresh. Since the existing distribution don’t service it there is no channel conflict to be worried about. If you currently sell through distribution it is now the time to try selling direct to the end user, and vice-versa. If the Internet looks tempting, why not give it a try?

Reason 2: Distribution is Loosing Business to Competing Channels

It’s a fact: some type of retailers just can’t keep up with the modern day competition. For example small mom and pop shops are loosing business to big retail chains that are able to provide a wider product assortment at much lower prices.

If you sell your products through these smaller distributors, you are probably experiencing flat sales. While they might represent a solid foundation because of their loyalty, in order to grow sales you will have to complement this channel with a more dynamic one.

Reason 3: Existing Distribution Does Not Provide Enough Margin

Selling through big box stores might look like the ideal model because of the volume they generate. However, they are also famous for squeezing the manufacturer of the last marketing dollar for things such as advertising and product placement. Their strict product placement rules, aggressive promotion of their private label brands and lack of loyalty are also well documented.

So if you find that the existing distribution channel does not provide enough ROI then it’s time to explore more profitable channels such as the Internet.

 How to Avoid Channel Conflict

Many companies have started to adopt a hybrid distribution strategy in order to avoid channel conflict. Such strategies include:

• selling top of the line products through specialized distributors or direct, while the more affordable ones via big box stores.
• developing unique products for a particular channel, so price comparison is not possible.
• making the existing distributors part of the new distribution model. For example, if you decide to sell over the Internet you can use your distributors to ship the products and provide localized service to the end customer and pay them a commission.

In conclusion, don’t be afraid to make chances to your distribution channel. In today’s economy the consumer has plenty of choices and is more difficult to reach than ever. As a result adapting the distribution model and making your products available everywhere your target customer shops, at any time, is almost a must.