What Are the Different Types of Business Growth?
Starting a business is not for the faint of heart. If you are currently in a place of wanting to take your business to the next level, buckle in as we’re going to go through the different types of business growth and the strategies to get there. Understanding the different structural stages and strategies helps businesses make thought-out decisions that drive business growth.
Organic Business Growth
Organic business growth seems to be the most natural and sustainable way to grow your business. You achieve this by expanding the business activities from the inside rather than growing by investing outside money ('organic' as opposed to 'inorganic' or 'non-organic'). It typically grows by selling more, gaining better productivity, better customer relationships etc.
Strategies for Organic Growth
- Market Penetration
Market penetration seeks to obtain a larger share of the current market by reaching new customer segments, increasing product promotion efforts and enhancing customer retention. This strategy focuses on maximising revenue from current products or services or those similar to them in the current markets available.
- Product Development
This strategy could involve developing new products or improving existing ones, attracting more customers and increasing sales.
- Market development
Entering new markets with existing products. Market expansion can also be called ‘market development’. Market development typically means selling current products in new markets, such as new regions or to new customer groups.
Strategic Business Growth
Strategic growth is about creating and executing plans to achieve the optimum company goals over a long period of time. Such planning requires an extremely in-depth understanding of the market, competitors, and the company’s internal capabilities and resources.
Strategies for Strategic Growth
- Diversification
Extending the line of products or services can create new revenue streams for the company and mitigate risk, particularly under turbulent market conditions or unstable industries.
- Partnerships
Establishing alliances with other companies can give you access to new markets, technologies and resources, helping you grow.
Merger, Partnership, or Acquisition
Growth through mergers, partnerships or acquisitions involves joining forces with other companies. This partnership can significantly magnify market share, resources or capabilities.
Strategies for Growth through M&A
- An Acquisition
The purchase of another company can instantly add new markets, technologies and customers to your firm. It’s a fast way to ramp up, but it needs careful integration planning to keep it on track.
- Partnerships
Cooperation with an external partner can help you overcome shortcomings in capabilities and extend your market reach (e.g., a tech company partnering with a marketing firm to aid in its service offering).
- Mergers
When you combine the strengths of two companies and reduce the weaknesses of each business, you create a more highly motivated and resourceful organisation.
Internal Business Growth
Internal organisational growth is when the business focuses on improving the way a company functions on the inside. This will eventually result in more efficient processes, higher productivity and increased profitability.
Strategies for Internal Growth
- Process Improvement
This category involves improving processes to reduce costs or increase productivity. Techniques and tools such as Lean or Six Sigma are great ways to implement this.
- Talent Development
It is often said that your biggest opportunity for growth lies within your company. In this respect, refining and empowering your workforce via training and professional development will bring greater results.
- Adopting New Technologies
Technologies should be adopted when they can improve operation efficiency and help generate new opportunities for innovation.
Stages of Business Growth
Knowledge of the different stages of business growth is necessary for applying the right strategy at the right time. Let's consider the typical stages briefly.
- Startup Stage
This is the beginning phase, where the focus is on product development and market entry. Organic growth and market penetration strategies are crucial at this stage.
- Growth Stage
Here, businesses will experience high growth rates in their revenue and market share. Senior executives must develop strategic growth and market expansion strategies.
- Maturity Stage
Growth slows down, and the focus shifts to maintaining market position. Diversification and internal growth strategies are often applied here.
- Stage of Growth
Businesses either innovate and renew their growth or face decline. Merger and acquisition strategies can be critical to revitalising the business.
Different types of growth are characterised by different hurdles and solutions. Is the issue organic or strategic? Are you experiencing natural growth, or do you need to implement new strategies? Are you making acquisitions, restructuring, or changing your company culture to drive growth? Understanding the seven basic types of business growth will help businesses ensure their longevity and sustained success in the marketplace.
Get in touch with us today to speak to a professional about which stage you business is in and which strategy would be best suited to get your business to the next stage.
