Determining the best way to grow your business requires a strategic plan and a good understanding of the different ways a business can grow. Slow, organic business growth is basic, but arguably the most effective means of growth. Rapid business growth, on the other hand, may be more profitable but often involves significant risks.
It is worth considering all types of business growth when assessing the best route for expansion.
Organic business growth
Organic growth typically takes longer than other growth strategiesbut tends to be safer. This is because you are growing by doing more of what you are already good at. You also have more time to develop the right capabilities to support and manage your expansion.
You can follow several paths to achieving organic growth. You can grow organically by selling:
- your existing product range to new customers
- your products in new geographical areas
- via additional distribution channels - eg the internet or a wholesaler
In order to sell your existing product range to new customers or in new territories, you may simply need to launch an advertising campaign or expand your sales team. See more on market research and market reports.
If you decide to use new distribution channels, make sure that this generates new sales rather than simply takes sales from your existing distribution channels. Find out how to increase your market share.
Another way to grow organically is to sell new products to your existing customer base. For example, if you are a travel agent you could also start selling travel insurance to your customers.
Rapid business growth
Rapid growth occurs within a short time, often in response to an unexpected opportunity or a successful growth strategy. In this period, your staff, production levels or customers may greatly increase at speed. This can lead to certain risks and challenges, such as:
- cashflow shortfalls
- operational inefficiencies
- customer service issues
- outgrown premises
Businesses often have to take on a lot of debt to finance their growth. As well as this, fast growth increases the rate at which cash leaves your business - your costs will grow to accommodate increased demand. All this means that, if growth spirals out of control, it can put your business' financial solvency at risk.
Find tips to help you avoid problems during business growth.
One way you can achieve rapid growth whilst minimising risk is by buying another business. You could buy the whole businessor you could just buy part of it. The business could be one of your competitorsor it could be a business that would complement the range of goods and services that you supply.
Growing a business is exciting but it will only be worthwhile if you can actually achieve and sustain growth. Before you rush into things, ask yourself first - is my business ready to grow.
