Every business has to grow to stay relevant and competitive but what growth means to one company can mean something completely different to another. Business growth is a stage where an organization experiences unprecedented and sustained increases in market reach and profit avenues. This can happen when a company increases revenue, produces more products or services, or expands its customer base. There's no surefire formula for instant success. Growth is an ongoing process that requires hard work, patience, and dedication. There’s no special step or secret way to surpass other businesses in the industry or achieve immediate success. There are proven ways to reach growth milestones that can catapult a business to success.
Let’s talk about the types of business growth which can be broken down into the following categories:
Organic business growth
With organic growth, a company expands through its own operations utilizing its own internal resources. This type is considered the easiest but most effective way of business growth. It best fits startups and companies that have just entered the market, while being less effective in the long term for established brands. Organic growth implies physical business expansion, i.e., upgrading the product lines, producing more goods, working in several shifts, large space rental, opening a new storefront, etc. An example of organic growth is making production more efficient so you can produce more within a shorter time frame, which leads to increased sales. Additionally, the increased revenue created from organic growth can help fund more strategic growth methods later on.
Strategic business growth
This approach works well for long-term goals and companies that have gone through organic growth. Strategic growth involves developing initiatives that will help your business grow in the long term. They invest the money earned during organic growth into strategic growth strategies. Unlike organic growth, these initiatives often require a significant amount of resources and funding. An example of strategic growth could be coming up with a new product or developing a market strategy to target a new audience. In other words, this means expanding the product line and reaching new markets.
Internal business growth
Internal growth strategy seeks to optimize internal business processes to increase revenue. This approach can be implemented between the organic and strategic types. Similar to organic growth, this strategy relies on companies using their own internal resources. Internal growth strategy is all about using existing resources in the most purposeful way possible. It's not focused on production but aims to use the current resources more efficiently to optimize the company's workflow. An example of internal growth could be cutting wasteful spending and running a leaner operation by automating some of its functions instead of hiring more employees. Internal growth can be more challenging because it forces companies to look at how their processes can be improved and made more efficient rather than focusing on external factors like entering new markets to facilitate growth.
Partnership, acquisitions, or merger business growth
As the name suggests, this approach implies cooperation with another company for mutual benefits. Although riskier than the other growth types, mergers, partnerships, and acquisitions can come with high rewards. There’s strength in numbers and a well-executed merger, partnership, or acquisition can help your business break into a new market, expand your customer base, or increase your products and services on offer.
Business growth allows companies to blow up their income, expand their product line, partner with suppliers on the most favorable terms, reach new audiences, and create a team of professionals. In addition, ongoing growth attracts job seekers. Everyone wants to be a part of a big community aimed to develop and create a perfect product. So, such companies receive a big number of CVs and can choose the most talented candidates to join their team. Growing your business affects the quality of customer care service as well. Companies investing in their support team improve after-sales service, which results in a high level of customer loyalty, satisfaction, and retention.
Companies face different challenges at each stage of their development. Based on your company profile, you should know which stage your company is positioned in and which strategy would best suit the growth. Let's take a close look at each of them to know how to cope with these difficulties.
At the initial stage, the goal of each startup is to survive. The company starts from the business owner who finds several employees taking several roles. Their main task is to build brand recognition and deliver their product value on a tight budget. The main challenges of each startup include ensuring that the product is competitive and can meet customers' needs and expectations.
At this stage, the startup has a business model and does its best to grow. Since scaling a business scare lots of entrepreneurs, they often never even risk taking any actions to grow, losing all the opportunities. Although, it's vital to look for ways to increase the customer base. Still, it seems challenging because the startup is limited in funds.
At this stage, the business came to certain stability which no longer requires such output from the owner. All the processes have been set and worked well sometimes for years. This stage makes the owners focus on geographical expansion, building worldwide recognition, and product diversification. Despite a more or less stable growth period, maturity requires more cash flows for implementing new strategies and promotions.
This is a risky one, however, it may still seem stable to the owners. They have regular income and brand awareness and may stop looking for new ways to expand. Hence, if they don't invest in new ideas and technologies, their business can decay.
The idea behind the above is to know where your company situates itself in the market and which growth strategy would best suit it. You can't increase your income if you don't expand your business. A company that doesn't invest in regular customer attraction loses its growth opportunities. Companies investing their resources into development increase their market share slowly, but surely.
In the next part, we’ll be talking about the strategies that can be implemented to grow your business.