03 Mar Level the Playing Field with Organic Growth
Although the term “organic growth” is fairly common in the business world, I find that the concept of organic growth is often misunderstood by many business owners and executives. Organic growth can present many unique opportunities for businesses to leverage their core competencies to expand both revenue and profits through a slower, more deliberate process that requires a combination of customer-driven improvements, easy adaptability and intelligent investment.
Organic growth defined
Organic growth is growth from within. It requires time and nurturing to develop a strong foundation that can then be leveraged to build a larger and more successful company over time.
Organic growth is very different from strategic (or inorganic) growth which is typically driven by acquisitions, mergers, or takeovers to expand a company’s product offerings or access to new markets.
Although this approach is usually favored by small-business owners because of its relatively low up-front costs, it’s also an attractive option for larger organizations who want to expand without using large amounts of liquid capital.
Benefits of organic growth
There are several unique benefits to adapting an organic growth strategy in your business or organization:
- Lower cost and risk. Organic growth tends to be less expensive and less risky than strategic growth because the source comes from internal energy and resources.
- Greater degree of control. Organic growth techniques allow you to grow your business on your own timeline. Because you’re not sharing control with another company, you can plan and execute your growth strategy at your own pace, while maintaining your management style and culture intact.
- Competitive advantage. Developing your company’s strengths through organic growth can make you a stronger competitor in your industry.
- Increased market share and customer retention. Because organic growth techniques encourage a stronger focus on sales and customer service, this strategy typically helps attract new customers while strengthening relationships with your existing customers.
Organic growth techniques
Although an organic growth strategy is less aggressive when compared to its strategic growth alternative, the approach still demands sound planning, consistently astute decisions and successful execution. Here’s a quick overview of the top five ways to grow your business organically:
- Give the people what they want. Connect with your customers to figure out what the market demands and how to supply it.
- Develop new business models. Consider joint partnership opportunities, affiliate networks or ways to share your expertise with a broader audience.
- Find new sales channels. Sell more of your existing products to existing customers, sell existing products to new customers, and expand to different geographic markets or new channels to market.
- Launch new products or services. Introduce a new product or service that complements your existing offering.
- Enter new industry. Explore the three types of new industry expansion to determine if there is a fit (especially for vertical or horizontal industry expansion.)
Growing your business organically offers you flexibility to grow your business at a rate that is comfortable to you while still having the opportunity to take advantage of changes in the marketplace. It also allows you to build value into your business so you get higher valuations and a higher sales price if you ever decide to sell. In our follow-up blog, I’ll dive into detail on the top five ways to grow organically with specific examples to drive the point home. In the meantime, think about what organic growth strategy you may be able to adapt in your organization.
P.S. If you’re local to the Lehigh Valley area, you may be interested in my upcoming workshop.