Follow this comprehensive guide to understand business growth, decide on the best type of growth to pursue, and develop a strategy and actionable steps to help your business scale in the future.
Growing a business is something every owner dreams of, but not all events surrounding growth can be influenced by the strength of your will alone. In times of economic uncertainty, your business grows when you focus on what is within your reach.
Knowing when it’s the right time for business growth, strategizing, and creating a comprehensive and adaptable plan will help you achieve the business growth you’re looking for.
In this article, we’ll take an in-depth look at the different types of business growth and give you tips on the things you can control when growing a business—strategy and planning.
- What is business growth?
- What are the different types of business growth?
- How to know if your company is ready to grow
- Business growth strategies
- Tips for creating a business growth plan
- How to measure the success of your business growth
- Manage your clientflow and your business growth
What is business growth?
Business growth is expanding and increasing the size, revenue, and market presence of your business. Growth is an ongoing goal for most businesses because it often leads to increased profitability, competitiveness, market adaptability, and sustainability in the long term.
What are the different types of business growth?
Defining the types of business growth is like naming the branches on a tree. It begins with the two main branches — organic and inorganic.
- Organic growth: Often interchanged with internal growth, organic growth involves expanding a business using its existing resources and operations. Examples include increased sales of current products or services, expanding into adjacent markets, enhancing customer loyalty, and optimizing internal processes.
- Inorganic growth: Inorganic growth occurs when a business expands through external means, such as mergers, acquisitions, or strategic partnerships. Examples include acquiring another company, merging with a competitor, forming strategic alliances, or buying intellectual property rights.
From there, the branches expand to include strategic, internal, and mergers/acquisitions growth. Within these primary branches, there are many business growth types to explore that are as diverse as the businesses that employ them.
- Strategic growth: Strategic growth refers to a deliberate and well-planned approach to expanding a business with a clear focus on achieving specific long-term objectives. This can come in various forms, such as targeting a new audience or developing a new product.
- Mergers, acquisitions, and partnerships: This is when a business buys another company or partners with it to grow together. This can happen through joint ventures, licensing, co-marketing efforts, or even outright purchasing another business’s assets and resources.
- Organizational growth: Organizational growth encompasses the overall development and expansion of a company, which may include increases in size, capabilities, resources, and market reach. An example would be a business expanding its workforce or infrastructure.
- Horizontal growth: Horizontal growth involves expanding within the same industry or market by adding products or services to increase revenue.
- Vertical growth: Also referred to as vertical integration, vertical growth occurs when a business expands within the supply chain. An example would be a business purchasing the manufacturer making its products or creating its own manufacturing means.
How to know if your company is ready for growth
Believe it or not, businesses can grow too fast. Choosing the right time for growth is vital for ensuring you can handle what comes next. To know if you’re ready for growth, consider these indicators:
- Stable operations: Being ready to take on growth means your current operations are running smoothly with minimal disruptions or issues. Growth means meeting more demand; having stable operations provides a solid foundation for taking on this challenge. If your existing processes aren’t running smoothly as your business grows, it can exacerbate existing problems.
- Market demand: If there is a demonstrated demand for your products or services, and you have evidence of unmet needs or untapped opportunities, it is a sign there’s a client base ready to support your growth, and is a compelling reason to expand.
- Scalable business model: To handle your intended business growth, your business model must be designed to scale without significantly increasing costs or complexity. This means implementing automation, hiring the right people, and executing a plan to take on an extra workload without costing extra money.
- Financial health: Look over your income statements, balance sheets, and cash flow statements. If you show consistent profitability, positive cash flow, and manageable debt levels, then that’s an indication that you’re ready to invest in expansion and weather potential setbacks.
- Competitive positioning: If you have a competitive advantage through unique offerings, pricing strategies, technology, or some other competitive position, it will help clear a path for growing your business. You want some that can help you stand out in a crowded marketplace and capture market share during your period of business growth.
- Strategic planning: Before you expand, you’ll need a well-defined growth strategy and a comprehensive business plan outlining your expansion goals and actionable steps for achieving them. Having this roadmap helps you navigate the challenges that arise along the way.
Speaking of strategic planning, once you’ve determined you’re ready for growth, you’ll need to create your business growth strategy next.
Business growth strategies
Like the various growth types, the strategies you can implement are as unique and diverse as the many businesses out there. Ultimately, you’ll need to tailor your business growth strategy to your specific goals and capabilities as a business. With that in mind, here are some common growth strategies to get your gears turning.
- Market penetration: This strategy focuses on selling more of your existing products or services to your current client base. It involves targeted marketing campaigns, competitive pricing strategies, and promotions through customer loyalty and referral programs.
- Product development: This centers on creating new offerings or improving existing offerings. To implement a product development strategy, you’ll need to conduct market research to identify client demands, emerging trends, and unmet needs. Then, develop new offerings or modify your current services to address the results of your research.
- Market development: This involves expanding your business into new geographic regions, demographics, or customer segments. Research and identify new markets that align with what you offer and have growth potential, then adjust your services and marketing to meet the unique needs of your new target audience.
- Strategic partnerships: These partnerships involve collaborating with other businesses or organizations to leverage their resources, expertise, or customer reach. Identify potential partners around your industry that offer complimentary strengths and identify ways you can help each other.
- Employee development: Invest in your workforce to enhance their skills. This allows you to service more clients’ needs more efficiently and thoroughly. Also, creating a culture of continuous improvement within your business inspires employee loyalty, as employees don’t like to feel stuck in the same place forever.
- Sustainability initiatives: Sustainability initiatives not only contribute to environmental conservation but also enhance your business’s reputation. A survey found that 78% of consumers say a sustainable lifestyle is important to them, so embrace this valuable information and share with potential clients how you’re becoming a more eco-friendly business.
7 tips for creating a business growth plan
Your business growth plan will dictate how you plan to achieve your desired growth and implement your strategy into a process that will influence your daily work habits. Every business’s growth plan takes time, but it will be worth it when something comes your way that you didn’t foresee, and you have your plan to guide you through it.
1. Assess where your business is at and identify expansion opportunities
Begin by conducting a thorough assessment of your current business. Perform a SWOT analysis to evaluate your strengths, weaknesses, opportunities, and threats. This analysis serves as the foundation for your growth plan by enabling you to pinpoint areas where your business can expand based on your core competencies and market demand. It will also enlighten you on areas that could use improvement.
You can strategically focus your efforts and resources for maximum impact by identifying your current position and potential growth areas.
2. Set goals and break down actionable steps by quarter and year
It’s essential to define clear, measurable, and attainable goals for your business. To ensure these goals are actionable and manageable, break them down into specific steps and milestones for each quarter and year. This detailed approach gives your team a clear roadmap, making progress quantifiable and easier to track.
3. Optimize operations to support growth without increasing costs
Streamline your processes and seek cost-effective solutions that will save you money that you can invest in your expansion. Consider exploring automation opportunities that can reduce manual tasks and enhance productivity. Efficient operations are fundamental to sustainable scaling, which allows you to accommodate growth without inflating expenses.
4. Develop a marketing and sales approach that aligns with your growth strategy
Begin by identifying your target audience, crafting compelling messaging, and tailoring your marketing efforts to reach the right customers. Marketers are masters at adapting to the changing needs of businesses and customers alike, so ensure whoever’s helping you with marketing is keeping your overall business growth strategy in mind.
5. Develop a breakdown of your financial and staffing resources and allocate them wisely
Create a comprehensive budget that outlines the financial resources needed to execute your growth plan effectively. Allocate resources strategically toward actions and investments that are critical to achieving your goals. Proper resource allocation ensures you have the financial and personnel support necessary to realize your business growth plans.
6. Be adaptable to unforeseen challenges and opportunities
Recognize that the business landscape is dynamic, and unexpected challenges and opportunities will arise. As stated in the introductory paragraph above, focus on what you can control. Adaptability is key to ensuring that your growth plan remains agile and responsive to evolving circumstances.
7. Offer incentives and celebrate goals reached
If you have a team working with you, encourage and incentivize them by offering rewards and recognition for achieving milestones and goals. This also helps foster a positive work environment and boosts team morale, encouraging continued perseverance toward achieving the next set of goals.
How to measure the success of your business growth
So, now that you’ve identified your ideal type of business growth, decided on a strategy, and implemented a plan, how do you know if it’s working? Well, short of now being able to afford to roll around in piles of cash on a yacht in the Mediterranean, here are some indications that your hard work is paying off.
- Key Performance Indicators (KPIs): Identify and track specific KPIs that directly align with your growth objectives. These might include revenue growth, profit margins, market share, or any number of KPIs that are related to your specific growth goals.
- Customer Acquisition Cost (CAC): A KPI to track if you’re looking for new customers is the customer acquisition cost. It’s all in the name — this tells you how much you spent on each new client you acquired.
- Customer Churn Rate: Unfortunately, for one reason or another, businesses lose clients. This indicates the rate at which you lose customers over a specific period. A decreasing churn rate suggests that your efforts to retain customers are effective.
- Website analytics: This is especially relevant if you have an online presence. Improvements in these areas can indicate successful digital marketing and customer acquisition strategies.
- Customer Feedback and Satisfaction: Gather feedback from customers through surveys. High customer satisfaction and positive feedback can indicate that your growth efforts resonate with your target audience.
Manage your clientflow and your business growth with HoneyBook
Growing a business all on your own can be a challenge. How do you improve efficiency all on your own? Whether you’re working alone or managing a team, automating redundant tasks and streamlining workflow helps save time, which is one of your most valuable resources.
HoneyBook is a clientflow platform that helps optimize your business’s operations by managing all your client touchpoints and freeing up time and personnel resources to focus on your business growth goals.
Easily keep track of all your clients and projects using HoneyBook.