We know the reasons are important — so why do we believe creating a business growth plan is crucial, even for established businesses? There are many reasons, but here are three that apply to almost all businesses at some point:
Funding: Most businesses are always looking for investors. You’ll have an advantage if you can show them a solid growth plan, as they usually expect it.
Insurance: Growth provides financial cushioning, protecting your business when unexpected problems arise. The economic challenges for brick-and-mortar businesses in 2020 are a perfect example.
Credibility: For new businesses, getting a loan and ensuring you can repay it is a top priority. There’s no real profit until the debt is managed. A growth plan will help you secure a loan and guide you on how to keep making payments.
Business growth is when a company sees ongoing increases in market reach and profits. This can happen by making more money, producing more products or services, or gaining more customers.
For most businesses, growth is the main goal. Business decisions are often made to help the company keep growing and succeed. There are several ways to achieve growth, which we’ll explain below.
Types of Business Growth
As a business owner, you have several paths for growth. Business growth can be divided into the following categories:
Organic Growth
Organic growth happens when a company expands using its own resources. It doesn’t rely on external resources.
Example: Making production more efficient to increase sales. You might save some revenue to buy a second machine, doubling your production without debt. This allows you to take on more and larger orders, creating more revenue for further growth.
Organic growth relies on self-sufficiency and avoids debt. Increased revenue can fund more strategic growth methods later.
Strategic Growth
Strategic growth involves developing long-term initiatives, like creating a new product or targeting a new audience.
Example: Developing a new market strategy. These initiatives often require significant resources and funding. Businesses often start with organic growth to generate capital for strategic growth.
Pro Tip: Strategic growth can be a major effort. Consider hiring an expert or using a user-friendly platform to manage it.
Internal Growth
Internal growth focuses on optimizing internal processes to increase revenue using existing resources.
Example: Cutting wasteful spending and automating functions instead of hiring more employees. This strategy involves improving efficiency rather than looking for external growth opportunities.
Mergers, Partnerships, Acquisitions
These can be riskier but offer high rewards. A successful merger, partnership, or acquisition can help your business enter new markets, expand your customer base, or increase your product offerings.
A growth strategy is a plan to expand a specific aspect of your business, such as yearly revenue, number of customers, or product range. Strategies can include:
- Adding new locations
- Investing in customer management
- Opportunities to Franchise
- Expanding product lines
- Selling products online across several platforms
Your industry and target market will influence your growth strategy, but acquiring new customers is usually a key part.
Conclusion
A business growth plan is crucial for both new and established businesses. Moreover, it helps attract investors, provides financial protection, and boosts credibility. By using different growth strategies—organic, strategic, internal, and mergers or partnerships—businesses can achieve lasting success and adapt to market changes. Additionally, focusing on growth helps your business stay competitive, strong, and ready for future opportunities.
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