Just like a batter who has to dive out of the way from a bad pitch, business owners need to get up, dust themselves off, and step back in the batter's box, ready for the next pitch. Business owners now need to move forward after COVID and prepare their company for the next pitch.
Most businesses want to grow and prosper – that's why many of them started in the first place. Business growth has many meanings and there are various strategies to use to achieve growth.
Below we will discuss organic growth and highlight three strategies to help you achieve your business growth goals.
What Is Organic Growth in Business?
Simply put, organic growth is business growth achieved internally. It doesn't involve buying up similar companies to eliminate your competition, making sales growth more attainable. Organic growth consists of looking at ways to improve your business internally. Here are some examples:
- Look at your current processes (i.e., sales, manufacturing, HR, etc.) to identify ways to improve these processes.
- Speaking of products, do you have any ideas for new products or additions to product lines? Adding new products can boost sales.
- What products sell the best? Look at ways to reallocate resources to these items' production processes, as they bring in the most revenue.
Benefits vs. Drawbacks
As with almost every business decision, consider the benefits and drawbacks:
- Improving business processes usually helps a company save money, which can be used for other growth opportunities.
- Expanding your product line can increase sales and introduce your company to new customers.
- Reallocating funds from products or processes that don't generate revenue to those that do can help boost profits.
- Organic growth can take longer than buying out a competitor. Patience is key.
- With this slower process, some investors may not want to wait for a company to grow organically, even if this method tends to be a safer investment.
- Another time-consuming factor is finding and marketing to new customers for new products or product lines, mainly if the product focuses on a different customer demographic than you currently target.
Organic Growth Strategies
1. Optimize Your Current Processes
An excellent place to start when looking to grow your business from within is by examining your current processes. Inefficient business processes can cost a company money in different ways:
- Efficiency is an essential element for organic growth. Take a good look at your current processes. Where can you add resources? Can you add funding or employees to increase efficiency? By reviewing and auditing your operations, you can uncover deficiencies that can be detrimental to growth.
- Slow-running processes can cause delays in production or shipping. This delay is passed on to customers who have to wait longer for their product. Unsatisfied customers stop buying your products or using your services and can lead to negative online reviews.
2. Add or Expand Your Products and Services
Adding new products or services is probably the most obvious way to grow your business. Some things to consider:
- When adding a new product or service line, make sure to do your due diligence and perform a thorough cost analysis. Look at the cost of making the product or providing the service, as well as the processes that are in place, to see if improvements can be made.
- Spend time doing market research before adding a new product or service. Is there a demand for it? How large is the demographic the new product/service will target? How much competition is there for this type of product/service? These are questions that will need answering to forecast your sales growth in this area.
- Make sure you can price your new product/service competitively. Priced too low and your profit margins will suffer. Priced too high and your sales may suffer. Research similar products and services, find out what they offer, and see if you're able to set a price that will pique the interest of potential customers.
3. Reallocate Resources to Areas in Need
Another part of a business to look at for organic growth is resource allocation. Identify where resources are being allocated and your ROI (Return On Investment). Here are a few examples:
- Are you continually putting resources into a failing product or service, hoping it will "spring to life"? There are some instances where you may want to keep resources flowing into a product, especially if it is seasonal or still relatively new.
- If you have older products or services that aren't performing as you would hope, determine ways to improve the product/service. Compare the cost of improvements to sales projections to see if this makes sense. If your ROI isn't what you want, it may be time to move on from these older products/services and use resources elsewhere.
- Determine if some year-round products only sell well during certain times of the year. Consider altering your production schedule to match peak sales for these products, allowing you to reallocate resources from this product line during slow times to other products/services that perform well throughout the year.
Build and Add Value to Your Business
The benefits of growing your business don't stop at (hopefully) higher profits and happier stockholders. If done right, your business's value will increase as you grow.
The Value Builder System™ is an excellent tool for business owners as it gives you a current assessment of your business and offers advice for how to increase your company's value.
Take Your Business Personally
Think of your business as a living thing. Just like your body, you want to make sure you are taking care of it by watching what you eat (resource allocation) and exercising regularly to stay healthy (ROI). If you experience pain, you find ways to treat the problem. The same goes for running a business. If you have a problem area or something prevents your business from growing, you need to identify it and find a solution. Growing your business and staying healthy both require patience and smart decision-making.
After you've dusted yourself off from COVID, take a look in your "business" mirror and see where you can use the strategies above to grow your company organically. Your business will thank you for it!
© SVA Certified Public Accountants