Defining business growth is difficult as many experts disagree on a formal definition. The most commonly used definition of business growth is when the profit and market share the company achieves.
A different definition of business growth is a company’s growth that occurs through various methods. There are endless possibilities for businesses to grow from a marketing plan to changes to the business model.
One of the most important factors to consider when determining whether something happening in a company is considered business growth is whether that event can be quantified. If something isn’t assessed, it’s difficult, if not impossible, to know if it is expanding.
Growth in sales and the success of a business is the primary motivation for many who start a company. But, even though the vast majority of them do but not every business considers selling and business growth as their primary goal.
Certain businesses wish to ensure that their employees and customers remain at the top of their list. For these businesses, their growth strategies could concentrate more on the overall customer experience and the employee experience.
To stimulate growth, plans, strategies, and objectives must be aligned and complementary to each other. In reality, a business growth strategy must be considered in all aspects, from the beginning of a business plan creation to the improvement of product lines.
Growth vs Growth-Driven Business.
Identifying the cause of business growth and assessing the effectiveness of growth strategies is not easy. Studying the differences between growth-driven and growing companies is beneficial for many professionals.
While a growth-driven business is mostly focused on speedy outcomes, a growth-driven company is focused on the long-term sustainable growth of the business. Five essential considerations to make when understanding the distinction between growth-driven and growth-driven companies are:
1. Marketing and Sales Relationship.
The relationships between the marketing and sales departments can be difficult and full of miscommunications. The incompatibility between these departments could cause major problems for growth throughout the business. Growth businesses try to correct the departments’ misconceptions about one another.
The most frequent misconception that the marketing department personnel hold about sales departments is that sales reps don’t understand the effectiveness of marketing material. However, the majority of full-time sales professionals say that they are not aware of real-world sales tactics.
A good alignment between sales strategy and marketing strategy is vital to developing and maintaining growth strategies for businesses over the long term. Companies need to ensure that both departments have goals for growth that they are working towards in tandem.
2. Customer Journey.
Everyone knows that having an existing customer base is essential for long-term business performance and profit. There is a distinct distinction between a growing company and one driven by growth regarding customer base requirements.
A growing business is focused on acquiring new customers and expanding markets quickly. A growing business is focused on the long-term retention of its customer base.
Focus on the growth goals of a business driven by growth results in retaining customers new to the business in the long run. A growing company could have high volumes of new customers at first but not be able to keep these new customers over the long haul.
Companies that are driven by growth are intentional in every stage of the customer journey, right from the initial awareness to the stage of brand ambassador. Growing companies understand that their business’s success largely depends on long-term customer retention.
3. Brand Development.
In small and large corporations, a key indicator of a growing business is the harmony between the brand’s image and the customer experience. A well-established brand and image should be evident in a company’s services capabilities.
Defining a brand’s identity requires a thorough understanding of the company’s business model as well as the growth goals of the business. A company’s distinctive brand needs to be considered in every aspect, from the customer service experience and social media profiles.
4. Market Focus.
Growth-driven and growing business are two different things concerning new customers and markets. At the same time, a growing company might appear unstoppable in its efforts to gain new customers. However, the goal and motives behind the effort are for revenue generation, not the customer experience.
A business that is driven by growth is passionate about customer service, both for new customers as well as long-term customers. Growing companies ensure that they are aware of the market before entering and even anticipate market shifts before they happen.
A company growing a successful business often ensures that clients receive the best product and outstanding customer service.
5. Technological Investments.
A growing business has a great and long-term business plan for technological advances. As opposed to waiting for the onset of a crisis to bring adjustments, companies driven by growth are ready for any change that the future might bring.
A growing business might not be able to make this kind of proactive technological investment because of an insufficient capital base or the unbalanced pursuit of a growth target. For instance, the focus on a marketing or sales strategy of a small-sized business or a new venture may result in a lack of capital to meet the demands of the looming market crisis.
The Importance of Business Growth.
Each business must be aware of the importance of growth for the success of its business and its profitability. All professionals must be aware of many other reasons to grow for business.
The most well-known reason why growth is crucial is the boost in profit businesses experience because of it. The increased profitability gained from making more sales provides a business with more resources.
Another major reason expansion is essential is the opportunity to hire more employees. The proper amount of employees in the workforce helps in everything from customer service capabilities to improvements in product lines.
Furthermore, employee retention rates are often higher during times of growth, particularly when the growth objectives and employee goals coincide. With more employees on the payroll, growth goals can be added, and new opportunities could be considered.
Growth allows a company to profit from new opportunities that might not be possible otherwise. For instance, small businesses can successfully enter an entirely new market by using the additional funds and resources acquired during their expansion.
The range of products or services that a company offers can expand in direct response to the expansion of the business. Not only can the expansion of a service or product line aid in increasing profits for businesses and increase profits, but they help businesses gain a competitive advantage.
If a business has gained an edge in its market, it will be more likely to secure a greater market share. With a higher market share percentage, the continued growth of the customer base is possible, even if it isn’t certain.
The ability to maintain and gain your competitive edge is dependent on continuous development. Therefore, small and big corporations must be certain to constantly search for opportunities to grow.
Creating a solid brand and reputation for outstanding customer service will draw more customers in the future. In the future, the coherence between brand image and customer service experience can increase the odds of a company keeping new customers for the long haul.
Four Types of Business Growth.
Beyond defining a company as a growth-driven or expanding business, they also grow in four ways. The four primary kinds of growth that businesses could experience are organic, internal, strategic and finally, partnerships, acquisitions, or merger growth.
Understanding the four kinds of growth could aid in making business strategies more efficient and well-organized.
1. Organic.
Organic growth is usually thought of as the most efficient method of business expansion. It’s also widely regarded as the most efficient method.
Organic growth can be described as the company’s substantial growth, from developing new products to a brand new store opening. As more products and services are provided, and sales rise, organic growth usually requires expanding the physical space available to customers.
Organic growth is an excellent strategy if you are a brand new company or small business that is entering the market for the first time without adequate stock. However, it is to be remembered this plan is not sustainable over the long run.’
2. Strategic.
Contrary to organic growth, Strategic growth is characterized by an emphasis on the long-term. Strategic growth is a fantastic option following the conclusion phase of the growth organically phase.
One reason it is essential to complete the organic growth phase before moving into the strategic growth stage is the number of resources required. The ideal situation is that during the stage of organic growth, you would produce a substantial amount of capital that allows the company to invest in long-term growth objectives.
Businesses planning their business should ensure that they keep in mind strategic growth. Strategic growth strategies can include releasing new products for a particular product line or updating marketing strategies targeting a particular customer base.
3. Internal.
The principal goal for internal development is to use and maximize resource use. This is why internal growth differs from organic and strategic growth since it doesn’t focus on production.
Internal growth is frequently used in conjunction with an organic or strategic approach due to its capacity to maximize resource utilization without requiring an investment of a significant amount. Instead of investing in expanded production or business development, internal growth seeks to use resources more efficiently.
Internal growth could include a more efficient business plan or business models modified to optimize resource use. Although internal growth might initially be intimidating for team members, making the most efficient use of the resources at hand is beneficial.
Four Partnership, Acquisition, or Merger.
Many companies may choose an acquisition, merger, or partnership for a growth strategy. A partnership or merger is usually regarded as the riskiest growth strategy, but it is also the one with the greatest likelihood of reward.
This approach can allow easier market access while expanding the existing customer base. Furthermore, increased production capabilities could make the design and launch of new products easier.
Another benefit to executing the acquisition or partnership and merger is the possibility of spurring businesses to innovate and improve the chances of business success by working together.
Four Main Strategies for Business Growth.
There are four main growth strategies that all businesses should think about implementing. These strategies cover the development of products and diversification, market development and market penetration.
Utilizing these strategies correctly will result in long-term growth and profitability for your business. The four strategies comprise the following types of strategies:
1. Product Development.
In the process of product development, New products are developed to meet the needs of a market already in place. The major benefit of this growth strategy for product development is that existing customers can be used instead of a requirement for establishing a new market.
A good example of product development could be an expanding product line to include games for cards.
2. Market Development.
Contrary to product development, marketing development opens up a product or service in a new market. Market development may be based on geography or a new market.
A good example of market development might be a toy manufacturer setting up a new location for its business in a different nation.
3. Diversification.
Diversification happens when a new product is introduced into an entirely new market. The diversification strategy comes with risks and also the possibility of high rewards.
One example of diversification might be a toy manufacturer creating parts for machinery that they can sell directly to manufacturing customers.
4. Market Penetration.
The goal for market penetration would be to expand market share by utilizing the products or services already in existence. Methods for market penetration vary from price reductions to boosting marketing strategy investments.
A prime instance of market penetration could be a toy manufacturer reducing the price of their most selling item.
How to Write a Business Growth Plan.
Growth plans for the business are short-term blueprints that companies develop to predict the business’s success in the future. A growth plan for a business should contain both business strategies and models.
The end of every quarter provides a fantastic opportunity for businesses to assess the progress made in achieving their growth objectives and what needs to be addressed. Growth plans are typically designed in the belief that they are to be made available to investors and focus on revenues.
Numerous experts have pointed out that writing a growth plan is similar to writing a business composition. The information in the growth plan must include:
- Opportunities for growth and expansion
- Goals for fiscal growth
- Marketing strategy specifics
- The outline of the fiscal strategy
- Employee scheduling requirements
Conclusion
- The growth of the business is vital to bottom-line profits and for the success of your business.
- All businesses should know about the significant differences between growth-driven and business growth companies.
- Four types of growth for businesses are organic, strategic internal, mergers, acquisitions or partnerships.
- Four strategies are the development of products and market development, diversification, and market penetration.
