Growth is something all organizations aim for. A business expansion often brings about increased sales, boosting the organization’s market dominance. However, it’s impossible to define business growth in watertight terms as it could mean different things for different entities. Here, we’ll attempt to broadly deconstruct what business growth is and why it’s vital for small organizations.

  1. What Is Business Growth?

  2. Stages Of Business Growth

  3. Types Of Business Growth 

  4. Why Is It Important To Grow Your Business?

  5. Primary Drivers Of Business Expansion Or Business Growth

  6. How Can You Measure Business Growth?


What Is Business Growth?

A business that’s expanding in one or more ways is said to be growing. Business growth can’t be measured by a single metric. Instead, you can demonstrate an organization’s growth by highlighting relevant data points, such as:

  • Income
  • Sales
  • The organization’s worth
  • Earnings/revenue
  • Number of employees
  • Number of clients

 Not all of these have to change at the same time for a business to grow. For example, revenue might increase without an increase in market share if existing customers purchase more. It’s even possible for one measure to rise while another falls. For example, if sales rise because of a lower product price, the organization’s overall revenue may decrease.

As a result, defining progress might be challenging. Firms usually consider their objectives to determine the growth metrics that are most crucial to them.

For some passionate start-ups, this may imply raising the overall number of clients, even at the risk of incurring a significant loss in the early stages of development. On the other hand, some businesses profit by gradually expanding their income and sales to ensure that money is flowing in to cover costs.

Stages Of Business Growth

Any growing business is said to go through these five stages.

1. Existence

Existence is the first stage in the life of a growing business. Obtaining clients and offering goods or services are the primary concerns of the new organization.

The structure is straightforward, with the owner/entrepreneur handling all business affairs and supervising employees. Systems and institutional planning are either non-existent or limited. The organization’s only plan is to stay alive.

From newly opened eateries and retail businesses to high-tech firms that have yet to establish output or quality control, diverse organizations exist in this stage. Many of these businesses never obtain enough client acceptability of product capability to survive.

It’s prudent to ask these questions at this stage:

    • Can we gain enough customers, sell our products and provide assistance well enough to turn a profit?
    • Can we expand our sales base beyond that one important customer or prototype production chain?
    • Do we have adequate funds to meet the significant cash requirements of this introduction stage?

2. Survival

The organization has proven that it’s a viable corporate entity by reaching this point. It has several clients and sufficiently satisfies them with its products or services. As a result, the focus moves from primitive existence to a revenue-to-expense relationship.

This stage is characterized by the following concerns:

    • Can we earn enough cash in the short term to break even and cover the cost of repairing or replacing our capital assets when they wear out?
    • Can we, at the very least, create sufficient working capital to stay in existence? At the same time, can we fund enough development to generate an economic benefit, given our dynamic market niche?

3. Achievement

Owners must decide whether to capitalize on the organization’s achievements and expand or keep the business stable and profitable as a foundation for further owner activities. As a result, a significant question is whether to use the business as a growth platform or a source of support for the owners when they entirely or partially withdraw from the business.

4. Take-off

The main issues at this point are how to grow fast and how to finance the expansion. The most critical questions at this point are:

    • Is it possible for an owner to assign responsibilities to others to increase managerial effectiveness of a rapidly expanding and increasingly complex business?
    • Will the action be an appropriate delegation, with performance controls and a willingness to accept responsibility for mistakes, or will it be a surrender?
    • Can we meet the high demands of a growing business and secure a cash flow that isn’t destroyed by ineffective expense controls or rash investments?

5. Maturity of Resources

If you want to grow your business at this stage, stabilize and manage the economic rewards brought on by quick business expansion. You should also maintain the advantages of minor scales, such as agility of action and entrepreneurial culture.


Types Of Business Growth

The following types of business growth are useful to know when setting up or growing a business:

1. Organic

Organic development is widely regarded as the most straightforward technique to grow your business. It is also widely considered as the most successful strategy, which is fortunate.

You can define organic growth as an observable business expansion that ranges from new product development to the opening of a new business location. Organic growth needs more physical space to serve clients as you offer more items or services and your sales increase.

2. Strategic

Strategic growth is more long-term in nature. Following the end of the organic growth phase, a strategic growth method is an outstanding option.

You should consider strategic expansion while undertaking business planning projects. Examples of strategic growth strategies include launching new items for a product line and updating marketing strategies to target the specific new industry demographic.

3. Internal

Internal growth’s principal goal is to make the best use of existing resources for your growing business. Because internal growth does not propose solutions to output, it differs dramatically from strategic and organic growth.

4. Merger, Acquisition Or Partnership

This method can make it easier to enter a new market while simultaneously increasing the size of an existing consumer base. Increased production capacity can initiate the development and introduction of new items much smoother.

Why Is It Important To Grow Your Business?

All enterprises must aim for business growth. However, the organization’s stage of development will determine the type of expansion necessary.

Start-ups typically need business expansion to solidify their market position and quickly develop to a size that generates enough income to cover expenditures and make a profit.

More mature organizations don’t need rapid business expansion. They may, however, wish to double-check that their measurements are on the right track. Even if revenue and sales remain the same, a rise in profitability brought about by sales process efficiency could assist a steady organization in collecting cash to defend against future risk.

Primary Drivers Of Business Expansion Or Business Growth

Businesses do not expand on their own. If a firm wants to grow organically, it will need to put in place procedures to help it do so. The following are some variables that can aid a growing business:

  • People driven by a growing business can motivate others to do the same
  • A growth-oriented owner might be the engine that propels the organization forward. Other managers and staff, however, require both the desire and the skills to drive business expansion
  • A strategy focused on a growing business
  • While people are the driving force behind business growth, a strategy must be in place to propel the organization ahead. It could include attracting new customers, offering new products or expanding into new markets.
  • Processes and infrastructure needed to support the expansion
  •  You can use processes to grow your business once the organization has employees that want to grow and a strategy prioritizing growth. Applying automated tools to make operations more efficient or ensuring facilities are large enough to keep the stock that will be required as an organization grows are examples of this.
  • Sufficient funding to enable the above

All the above principles have one thing in common: they all require funds for implementation. If you lack the funds to make the hires, invest in the product or establish processes, you will struggle to grow your business.

How Can You Measure Business Growth?

There’s no set metric to measure the growth of a business. Here are some basic things to keep in mind when measuring your business growth:

1. Define your organization’s expansion objectives

The first step in determining how to measure business growth is to establish your objectives. These will likely be related to your organization’s stage of development. For new businesses, the goal may simply be to establish a customer base and increase revenues.

2. Gather information based on these objectives

Once an organization has identified its objectives, it must collect data to support those objectives. Organizations can assess growth more accurately if they have more data.

3. Don’t forget about external influences

It’s critical to include external influences when calculating your organization’s growth rate. For example, a corporation may attribute a significant boost in monthly sales to a recent marketing effort.

There are multiple ways of looking at this and diverse angles to approach the topic from. However, it helps to define the parameters that you want to assess your business growth against.

While it may seem daunting to grow your business, deploying the right strategy will help you reach great heights. Harappa’s Creating Solutions is a problem-solving course that will teach you to identify the best answer for any workplace challenge. This online course introduces the simple approaches for evaluating and dissecting an issue and developing the best solution for it.

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