Understanding the different types of business growth will allow business owners to select the right type for increasing sales, gaining more customers, and becoming a stronger company. Whilst some growth types involve opening new branches and taking on more staff, there are many other ways to achieve business growth whilst improving the existing products. New markets and increasing a business’s profits and working together with strategic partners are all ways to grow.
There are various types of business growth, and the optimum choice will depend on the aims of a company, available resources, and what customers require. Knowing and understanding the main types of strategies will allow entrepreneurs to decide smartly.
What is Business Growth?
A business grows when the size, profit, new customers, market share, or overall value are increased. Business often grows slowly as they improve their processes or can also grow quickly by opening new locations or acquiring new businesses.
A small clothing store could grow by selling more products to their existing customers. Alternatively, a business may open a new location, for example, in a different city, or open a website.
Both options would help grow the business; however, they will require different investments.
6 Main Types of Business Growth
- Organic GrowthOrganic growth can be achieved when a business aims to grow by utilizing only their own existing resources. They can focus on increasing sales, relationships with customers, and products/services.
Organic growth can be done in many ways such as:
- Improving the quality of a product
- Increasing repeat purchases
- Improving customer service
- Promoting using the right channels
- Creating products to go along with them
For example, a bakery may increase sales by adding bespoke cake products, improving the online ordering process, and increasing repeat purchases. However, it can be a slow way to grow your business.
- Market ExpansionExpanding the markets by selling your current products/services to new customers.
You may want to open in a new city, target a new age group, or start selling on online marketplaces.
A local furniture maker that previously sold products within a single city began delivering nationwide.
It’s important to research the demands from your customers, as well as competition, logistical costs, and any local requirements. If you aren’t prepared to enter this new market, it can create unnecessary costs.
- Product DevelopmentCreating new products or developing existing ones to meet the requirements of customers. If you know who your audience is, then this strategy can be very effective.
A skincare business may create a new line of fragrance-free products based on customer requests.
As with any new product development, research, testing, pricing, and customer feedback should be conducted. Ensure there is demand for the new product before investing.
- DiversificationWhen a new product or service is added outside of what you previously sell. This can be aimed at your existing customers or an entirely new audience depending on the strategy.
For example, a company that provides office furniture may start offering design and installation. This can bring extra revenue streams but can get complicated and costly.
- Strategic PartnershipsBy partnering with other companies, you can gain access to customers, share resources, or improve your offerings.
This can be done through joint promotions, distribution agreements, shared technology, or complementary services.
A fitness studio partners up with a nutrition business to offer combined packages.
A good partnership will have clearly defined roles, shared goals, and provide benefits to the companies involved.
- Mergers and AcquisitionsBy merging with other businesses or acquiring another company, you can grow your company by expanding your customer base, entering new markets, gaining new technology, or improving your competitiveness.
A software company may want to acquire a smaller developer to take on new features. Acquisition can help you grow quickly but can also require substantial investment and financial analysis and be a complex process.
How To Pick The Right Strategy
Decide on which business growth type suits your current stage and where you want to end up. Ask yourself questions like:
- What is it you want to achieve? Are you looking to increase sales, gain more customers, or increase your range of products?
- Do you have the resources? What is your budget, staff, technology, and capacity?
- What do your customers need? Use feedback and market research to find opportunities.
- What risks can you handle? Consider how much money and complexities are involved.
- How will you measure success? Look at key metrics.
If you are a small business with little resources, then organic growth may be better to start with. Whereas an existing company may be able to invest in acquisitions or new markets.
Conclusion
There are many ways to increase your revenue, gain new customers, and improve your position within the market. Businesses can grow organically, expand their market, develop products, diversify, partner with strategic partners, or acquire.
The best strategy is the one that fits your business goals, what your customers require, and your resources. With a clear plan in place, track your progress. Grow your business and adapt your strategy.