Growth implies many things to various people, and growth is essential for the long-term survival of a business venture. Without growth, a business can’t sustain long. It makes it simpler to attract new talent, acquire assets, and fund investments. It also drives business profit and performance.
A growing business aims to boost sales and to establish its position in the market. However, business growth isn’t a strictly defined concept. In this article, we’ll discuss what business growth is and why it is crucial for small businesses.
So what is business growth?
An expanding business is one that is growing in one or more ways. There is no particular metric to measure growth. Instead, various data points act as the measurements of growth, and they are:
- Company value
- Number of employees
- Number of customers
Businesses can expand in some of these metrics but not in others. For instance, revenue can rise without any increase in the profits but due to the more customers’ purchases. Chances prevail that one metric may increase while the other can decrease. If the expansion in sales growth is due to a reduction in product price, a business’s overall revenue may still go down.
This fact indicates defining growth can be troublesome. Those looking to expand the business should look at the business goals to secure growth metrics they find essential.
Some ambitious new businesses imply doing everything they can to increase their number of customers, even if they incur massive losses in the early stages of growth. Still, other companies will profit from slowly growing sales and revenue to make sure money flows that eventually helps to cover the costs of the business.
Related: Small Business Growth with Inbound Marketing Tips
Why is business growth crucial for a small business?
All businesses must experience growth. However, the type of expansion required will rely on the stage of growth where the companies fall-under.
Start-ups usually want to grow to cement their spot in the market and promptly get to a big enough size to bring sufficient revenue to cover the costs and start making a profit.
Experienced businesses don’t need to grow quite as fast as start-ups. However, they may yet want to make sure their metrics are going in the exact direction. The rise in profitability, brought about by sales process performances, can help a steady business develop liquidity to defend against future risks, even sales and revenue stay the same.
Most small businesses wish to grow becoming bigger, perhaps through increased market share or sales, but the size isn’t the only driver. Many other benefits inspire businesses to grow. For example:
- Reduced costs
- Greater market dominance
- Top resilience and sustainability in the current market
- Ability to mitigate commercial risks
- Higher buying and bargaining power
- The capability of surviving market downturns and fluctuations
- The capacity of attracting the best talent and staff
- Ability to reduce the threat of competition
Growth may not be practical or achievable for all businesses, but usually, stagnating will possibly lead to missed opportunities.
What are the primary business growth drivers?
Companies don’t grow by themselves. If a company aims to accomplish organic growth, it should put systems to encourage growth. Here are a few factors that can help a business grow.
A strategy that prioritizes growth
While people are the main drivers for growth, there also has to be a powerful strategy to urge the business forward. This process could rotate around acquiring new customers, releasing more products, or exploring new markets.
People with the motivation and capability to drive growth
The most crucial factor is having people committed to growing at the head of the business. A growth-focused entrepreneur can be the driving force behind the company’s growth. Other employees or managers both require the expertise and the motivation to push a company to grow.
Processes and infrastructure required to facilitate growth
Once the company that has people who want to grow and a proper strategy put in place that prioritizes growth, processes are required to be in place to promote expansion. This cycle may involve implementing automation software that makes business processes more productive or making sure warehouses are spacious enough to store the stock that will be needed as a company expands.
Enough funding to make the above possible
All the above factors have one thing in common: all of them require funding to be implemented. If an entrepreneur doesn’t have the required money to make investments in the product, the right hires, or implement business processes, and they’ll still struggle to achieve growth.
There is no single way to expand a business. You may wish to form business partnerships, launch new products in existing markets, your service area, explore other business growth strategies, or diversify your existing product line.
Related: Identifying opportunities for Business Growth with Market Research