What is Business Growth?
Determining what constitutes business growth is a challenge with many professionals arguing over the proper definition. A common definition of growth in business is when profit and market share that a business experiences.
A different definition of growth in business is the growth of a company that takes place through a variety of methods. From marketing strategies to the updating of business models, there are endless possibilities for a company to grow.
One of the most crucial factors to determine if an event in a business is considered to be business growth is whether that is measured. If something isn’t quantified, it can be difficult to, if not impossible to establish if it’s expanding.
Growth in sales and business growth is the main motivation of many who start an enterprise. But, even though the vast majority do so, all companies thinks of business and sales as their primary goal.
Certain businesses wish to ensure that their customers and employees remain their primary focus. For these businesses the growth strategies may be focused on the overall customer experience and employees’ experience.
To stimulate growth, business strategies plans, goals, and plans must be aligned and in synergy with one another. In reality, a business growth strategy must be considered throughout all phases from the first business plan creation to improvements in product line.
Growth vs Growth-Driven Business
Finding the root of growth in business or evaluating the effectiveness of growth strategies is not easy. For many professionals, it’s useful to examine the distinctions between growing businesses and growth-driven companies.
While a business that is growing is focused on quick results, a business driven by growth is focused on long-term sustainable growth of the business. Five important considerations to make when understanding the distinction between growth-driven and growth-driven companies include:
1. Marketing and Sales Relationship
The relationships between the marketing and sales departments is often tense and fraught with miscommunications This incompatibility could cause major growth problems for the whole company. Growth businesses make an effort to dispel the misconceptions that these departments might hold about one another.
One of the most common beliefs that employees of the marketing department have concerning sales is that sales reps don’t understand the effectiveness in marketing material. However the majority of full-time sales professionals claim that marketing professionals are not aware of real-world sales techniques.
The compatibility between sales strategy and marketing strategy is vital to develop and sustaining business growth strategies in the in the long run. Businesses must ensure that both departments have growth objectives to achieve in tandem.
2. Customer Journey
Everyone knows that it is vital to long-term performance and profit. There is a huge distinction between a growing company and one that is driven by growth regarding customer base requirements.
A business that is growing is concentrated on obtaining new clients and establishing new markets quickly. In contrast, a business that is driven by growth is focused on long-term customer retention.
The focus on growth goals of a business that is driven by growth will result in retention of new customers in the long in the long run. A growing company might have a high number of new customers for a short period, but fail to keep the new customers for a long time.
The companies that are growing are focused on every stage of the customer journey from awareness to the stage of becoming a brand ambassador. Companies that are growing understand that the success of their business is largely dependent on the long-term retention.
3. Brand Development
Small and big corporations, the most obvious sign of a business that is growing is the compatibility of the brand’s reputation and the customer experience. The well-established brand and image should be evident in the company’s capabilities to provide customer service.
Definiting a brand’s identity requires an knowledge of the business model and the growth objectives that the company has. In actuality the unique brand of a business must be considered in every aspect from the customer experience as well as its presence on social media.
4. Market Focus
Growth-driven and growing businesses have different priorities on new customers and markets. While a growing company may appear determined to find new customers, however the main focus and motivation behind the efforts is revenue generation, not the customer experience.
A company that is growing is enthusiastic about customer service, both for new customers as well as long-term customers. Businesses that are driven by growth ensure that they are aware of any market that is new prior to its entry and even anticipate market shifts prior to their occurrence.
A company that is growing the definition of success for business is often at ensuring that clients get not only the best product, but also amazing, but also a high-quality customer service throughout the process.
5. Technological Investments
A company that is growing has an excellent business strategy and long-term business plans implemented in relation to technological advances. In lieu of waiting until a time comes that might trigger changes, companies that are growing are prepared for any change which the future could bring.
A growing company may not make the same technological investment because of the lack of capital or the pursuit of a growth target that is not a good fit. For example, a focus on a marketing or sales strategy for a growing small-sized business or a new venture may result in a lack of funds to deal with any market turmoil that is coming.
The Importance of Business Growth
Each business should be aware of the importance of growth to the success of their business and its profitability. There are numerous reasons for why growth is crucial for companies that every professional should be aware of.
Perhaps the most commonly recognized reason why growth is crucial is the increased profitability businesses experience due to. The increased profitability resulting from making more sales provides a business with a greater amount of resources.
Another major reason growth is crucial is the possibility of bringing on more employees. The proper amount of employees on staff helps in everything from customer service capabilities to improvements in product line.
In addition, retention rates for employees can increase during times of growth, particularly when goals for growth and goals for employees coincide. With more employees in the company the growth goals can be added and new opportunities could be investigated.
Growth allows a company to profit from new opportunities that would be impossible otherwise. For instance small businesses can be able to successfully enter an entirely new market by using the added capital and human resources gained through business expansion.
A service or product line provided by a business could expand due to the expansion of its business. Not only can the expansion of a service or product line aid in increasing profits for businesses however, they give businesses an edge.
When a business has achieved an edge in its market, it will be more likely to secure more market share. With a greater market share percentage, continued expansion of customer base is probable even if it isn’t certain.
Maintaining and gaining an edge in the market depends on constant innovation. Therefore both small and big corporations must be sure that they look for opportunities to grow.
The creation of a solid brand and reputation for outstanding customer service is sure to attract more customers in the future. Also, the connection between brand recognition and customer service experience can increase the odds of a business retaining new customers for the long haul.
Beyond defining a company as a growth-driven or growing, businesses also have growth in different ways. The four primary kinds of growth a company could be experiencing include internal, strategic organic,the acquisition, partnership and merger expansion.
Knowing how to understand each one of the four types of growth will assist in making your business strategy more efficient and well-organized.
Organic growth is usually thought of as the most efficient method of business expansion. In addition, it is widely regarded as the most effective strategy.
Organic growth is characterized by tangible and visible company growth that ranges from the introduction of new products to a brand new store opening. As more products and services are offered and sales grow organic growth typically requires larger physical spaces to service customers.
For new businesses or small-sized businesses that are entering an unfamiliar market with no inventory, organic growth can be the best strategy. But, it must be remembered that a growth plan based on organic methods is not sustainable over the long-term.
In contrast to organic growth Strategic growth is an emphasis on the long-term. The strategy of strategic growth is an ideal option following the conclusion phase of growth organically phase.
One reason why it is vital to complete the organic growth stage prior to moving into the strategic growth stage is because of the amount of resources required. In the ideal scenario, during the stage of organic growth, you would produce a substantial amount of capital that allows an organization to fund growth plans that are long-term.
The business planning process should always ensure that they consider strategic growth. Strategies for growth that are strategic can vary from the release of new products in the product line, to marketing strategy changes that target specific market segments.
The primary goal for internal development is the use and maximize resources. This is why internal growth is different from organic and strategic growth since it doesn’t focus on production.
Internal growth is commonly used as part of an organic and strategic plan because it can maximize resource utilization without requiring an investment of a significant amount. Instead of investing in expanded production and business expansion Internal growth is a way to utilize resources more effectively.
Examples of internal growth could include a less expensive business plan or business models that are modified to optimize resource use. Although internal growth might initially be intimidating for employees, it’s worth the effort to make the most efficient use of resources available.
4. Partnership, Acquisition, or Merger
Many companies might choose the merger, acquisition or partnership to grow their business strategy. Partnership either through merger or acquisition is typically regarded as the most risky growth strategy, but it is also the one with the greatest likelihood of reward.
This approach can allow for the access to a market, while expanding the customer base already in place. In addition, the increased capabilities of production could make the design and launch of new products more efficiently.
Another important benefit of carrying out the acquisition or partnership or merger, is that it has the chance to boost businesses innovate and improve the probability of success for businesses through collaboration efforts.
4 Main Strategies for Business Growth
There are four main growth strategies that all businesses ought to consider to implement. These strategies cover the development of products as well as diversification, development of markets, and market penetration.
Utilizing these strategies correctly will lead to long-term growth and profitability for your business. The four strategies are the following kinds
1. Product Development
When developing products New products are developed to serve a market that already exists. One of the advantages of the strategy of growth in product development is that existing customers are able to be used instead of the need for the establishment of a new market.
A good example of product development could be a toy line that is expanding to include games for cards.
2. Market Development
In contrast to product development, marketing development opens up a product or service in new areas of market. Market development may be based on geographic location or on a new market.
A good example of market development could be a company that makes toys setting up a new location for its business in a different country.
Diversification is when a new product is introduced into the market. This strategy of diversification growth comes with the risk of high and also the possibility for high rewards.
One example of diversification might be a toy manufacturer creating parts for machinery that are sold directly to industrial customers.
4. Market Penetration
The goal in market penetration is expand the market share of products or services that are already available. Market penetration methods range from price reductions to increasing marketing strategy investment.
A good example of market penetration might be a toy manufacturer lowering the cost of their top selling item.
How to Write a Business Growth Plan
Plans for growth in business is short-term plans that businesses create to predict future business growth in the coming years. The business growth plan must include both business strategies as well as models.
The end of every quarter provides a fantastic opportunity for companies to determine what growth targets were met and what needs to be addressed. Growth plans are typically designed with the intention that they are to be made available to investors, and heavily centered on the revenue.
Numerous experts have pointed out that writing a growth strategy is similar to a business plans. The information provided in the growth plan should be included.
1. Opportunities for growth and expansion
2. Goals for fiscal growth
3. Marketing strategy specifics
4. Financial strategy outline
5. Employee scheduling requirements
Growth in business is essential to bottom line profits and for the success of your business.
There are some important distinctions between growth-driven and business growth companies that every business must take note of.
The four types of business growth are organic, strategic internal, and finall ymerger, acquisition or partnership.
Four strategies are the development of products, market diversification, development and market penetration