If you’re looking to go from side hustle to full-time sustainability, here’s how to expand your small business with vertical or horizontal growth.
During her keynote at #seegirlworkfw17, Jaclyn Ling, Director, Bots Platform at Kik and tech startup founder, talked about the differences between “vertical growth” and “horizontal growth” in business.
I found these concepts very intriguing and as I look to scale both my freelance business and my content business, I wanted to explore these concepts a little bit further.
These terms typically are used in the startup world or within enterprise companies with large, integrated management teams, but I think there’s a lot we can take away from these concepts as well.
The Importance of Business Growth
As with any company, startup or freelance hustle, it’s important to know how you plan to grow your business. This is especially important if you’re looking to take your side gig to a level where it can sustain you full-time.
But it’s not just important to want to grow your business and take it as it comes. We have to plan how to grow as well.
One research study showed that planning improves business performance. And another study found that companies that plan grow 30% faster than those that don’t plan.
In fact, 71% of fast-growing companies have plans. They create budgets, set sales goals, and document their marketing and sales strategies [source].
Developing a growth strategy is necessary for your business’s survival and your livelihood. Boosting customer numbers, acquiring a greater market share, increasing revenues, and growing profits are all a part of business life.
If you don’t grow then you won’t survive.
Now that we’ve established why it’s important to grow and the need to plan for it, let’s go back to “vertical” growth vs, “horizontal” growth.
What is Vertical Growth?
Vertical growth—also referred to as “expanding into different vertical markets”—involves obtaining a greater share of the market where you currently operate by increasing your sales [source].
Vertical growth is essential scaling your service or product within your existing line of business.
An example of vertical growth is Uber, expanding their offerings to include Uber-X, Uber XL and Uber Black.
By going deeper into the current market, you get a chance to increase the demand for your product or service.
As a small business owner, you could add new features or capabilities to your existing products or develop new products altogether to supplement your core, marquee items.
If your small business is service based, you could expand your service offerings and provide new opportunities for your existing clients to continue working with you.
For example, if you were previously only providing freelance writing services, perhaps you could expand into content strategy and work more on the strategic planning side in addition to writing the actual content.
Or if you have a social media virtual assistance business with a focus primarily on Pinterest management, you could now offer Instagram growth management to your clients as well.
What is Horizontal Growth?
Horizontal growth means expanding the product or service to new markets—either new geographical locations or business sectors [source].
However, scaling horizontally means additional challenges might arise including product localization issues or industry-specific business aspects.
When Uber first launched its service, they were just in one city. Later, they expanded into more locations across the U.S. and eventually worldwide. In addition, they applied the same approach to create other on-demand services such as UberEats.
Again, for us small business owners, perhaps we want to start targetting customers in the U.S. or Europe.
With the internet, social media and international payment gateways, for service providers, this kind of business growth would be relatively easy to facilitate.
It’s no secret that one of my very first freelance writing clients was based in New York.
What Kind of Growth Strategy are You Planning?
Although I could work with writing clients just about anywhere in the world (as long as they want English), the growth strategy for my content business will be of the vertical kind.
Afterall, I started with a simple idea for a blog, that turned into a podcast series, workshops, and events. Not to mention I was also able to carve out a freelance business out of it as well.
But I would love for you to sound off in the comments section below.
As we come to a close in the year and start thinking about what to make of the new one just on the horizon, what kind of growth strategy do you think will work best for your small business?
Photo of Jaclyn Ling at #seegirlworkfw17. Photo via Tanya Mok.