Business success requires more than just hard work. As trends, consumer habits, and the economy change, you’ll also need to adapt and grow your company to keep up with the times and maintain your usual revenue levels. You have two ways of achieving this goal: organic and inorganic growth. We’ll explain both below.
According to Investopedia, organic growth is the growth rate a company can achieve by increasing output and enhancing sales internally. Organic growth, often referred to as “true growth”, can happen through price reductions, finding more customers, or boosting output to current clients.
Organic business growth is typically rooted in one of three primary strategies:
Inorganic growth occurs when a business merges with or is acquired by another business. Mergers and acquisitions can introduce the partnering companies to previously unreachable audiences and markets, thus making formerly unrealistic growth opportunities newly possible. Since a merger introduces growth paths that were previously close to impossible, inorganic business growth rates may be greater than organic growth rates.
There are many ways to measure the growth of your small business. The key is to be consistent over time so you have accurate benchmarks. Define what success will look like and decide exactly how to measure it.
The concept of benchmarking is more formally described as “the process of comparing one’s business processes and performance metrics to industry bests and best practices from other companies. Typically measured are quality, time, and cost.” (Wikipedia)
Among the reasons you may prefer to grow your business organically include:
Some reasons why you might want to think twice about organic growth include:
If the above organic business growth challenges concern you, then you may want to consider inorganic growth instead. Inorganic growth has the following advantages:
Some reasons why you might struggle with inorganic growth include:
Many SmartBiz Loans customers are growing through internal organic growth strategies. Here are a few:
Asha Waterstreet owns Tasteful Additions, a shop in upstate New York selling gourmet salts and vinegars in store and online. Business was going well but Waterstreet knew she could up sales with additional products. With low-cost funds from an SBA loan through a SmartBiz marketplace bank, she added luxury body products as well as tableware to her line up. Current customers bought more merchandise and new customers were attracted.
SmartBiz customer Randy Jacques owns Southern Utah’s The Tree Guy. As his business grew, Jacques realized that he needed additional equipment to keep up with demand. He used funds from an SBA loan to purchase equipment and is successfully expanding across the state.
SmartBiz customers Mary Grupka and Lisa Scibetta co-own Painting with a Twist (PWAT) art studios in New York. PWAT has an excellent reputation in the community and great word-of-mouth referrals. But Grupka and Scibetta knew they could better target their key demographic with additional marketing. They used funds from an SBA loan to launch more traditional channel marketing and creative events to introduce their brand to new audiences.
If you’re seeking organic growth, there are lots of strategies you can use. Here are just a few:
This is important and should be firmly established in your initial business plan. You can’t successfully market to everyone. Make sure you nail down who wants or needs your product and identify how to reach those consumers. If your target customer is over 60, you might want to skip social media and concentrate on email marketing or more traditional methods. If you’re targeting parents, explore informative content blogging.
Very few businesses are one-of-a-kind. Identifying and focusing on your USP is especially important when your product or service is similar to others in your industry. Check out effective USPs from giant brands like Avis and FedEx. Even with stiff competition, these corporations have set themselves apart from the pack.
If you share with your team and let them know your business goals, they’ll feel valued and will be more likely to be an engaged employee. Your employees can probably sense when things are not going so great or when they are. Honesty is the best policy. Share the challenges but when meeting goals and reaching KPI’s, be sure to share the wins. For more employee engagement ideas when pursuing organic growth, review 9 Effective Ways to Improve Employee Performance.
Businesses that achieve successful organic growth use a combination of both traditional and digital marketing strategies.
Traditional marketing refers to any type of time-tested campaign with a proven success rate. Methods include print advertisements, billboards, TV, newspaper and radio ads. While a billboard might be out of reach, there are cost effective traditional ways to get your business out there. Simply posting or handing out flyers can elevate your brand in the community and bring in new customers.
Digital marketing includes advertising on social media platforms, maintaining a targeted website, establishing a blog, email outreach, and mobile apps. Our article, Digital Marketing for Your Small Business, can help you identify the best channels to pursue.
You can’t execute a successful organic business growth plan without knowing whom you’ll target with your new or improved products or services. According to Hinge Marketing, companies that include regular market research as part of their growth plans grow twice as fast as other companies. The Hinge Marketing team suggests conducting this research at least quarterly, though if you have the resources for more frequent research, it likely won’t hurt.
Once you know more about the customers or clients in your audience, you can use their preferences and needs to inform your product development and optimization choices. For example, if you own a dance studio, you might be planning to target millennial women or perhaps parents whose children are interested in dance. However, if your market research uncovers an older crowd interested in dance lessons, you’d be wise to offer classes for older folks too. Organic growth may result.
Continuing with the above dance studio example, if you focus your services on the older crowd you discovered, then you might be in a unique position to see your revenue grow. Since organic growth relies strongly on finding new customers, expanding into niche services such as older folks’ dance classes may set you apart from your local competitors. Since chances are that few, if any, dance studios in your area offer these classes, focusing on this niche can direct more people – and money – your way.
If you’re struggling to obtain new clients, you can potentially find them by showing that your company is best qualified to address their needs. A thorough content marketing strategy can achieve this goal – the more blogs that your company posts about a topic, the more it will be seen as an expert in that field. Leads searching with navigational intent may stumble upon your blogs and, unbeknownst to them, find themselves at the start of your sales funnel. You can then nurture your new leads and hopefully secure them as customers – and every time you do, your business grows.
Organic growth isn’t mysterious. Approach this type of internal growth in a well-researched and systematic manner. Explore your industry to determine what your competitors are doing that works and doesn’t work is a great first step. You won’t have to reinvent the wheel or stumble blindly through strategies that are difficult or won’t get results. Consistency and research can help an entrepreneur meet organic growth goals.