Organic business growth relates to expansion from within a business, by using the business' own resources and capabilities. This growth occurs naturally, as a result of maximising output and sales internally. Organic growth is often a great indicator of a business' performance.
How do companies grow organically?
You can follow more than one path to achieving organic growth. For example, you can:
- offer promotions to existing customers
- up-sell and cross-sell to customers
- develop new product lines
- create new business models
- improve customer service
- improve productivity
- optimise your sales, pricing and marketing
- expand your customer base
Consider other strategies to improve sales and profitability.
You may choose to pursue one of these activities or more. A diversified approach to growth may give you the best chances of success. It may help to assess your options for business growth before choosing a course.
Advantages and disadvantages of organic business growth
Organic growth often presents less risk to business than other types of growth. It is also:
- easier to manage and control
- easier to finance through internal profits, investments, etc
- less disruptive on staff, operations and productivity
Organic growth builds on existing strengths, brands and customers and allows growth at a slower, steadier rate. However, such growth is not without challenges.
Key disadvantages of organic growth include:
- the time it takes to grow internally
- the size of the market may restrict growth
- the constraints of your existing resources, including people, assets and finances
- focusing only on internal efforts may cause you to miss other opportunities
Discover more advantages and disadvantages of growing your business.
Inorganic business growth
If you wish to grow more rapidly or gain access to new markets, you should consider inorganic growth. This type of expansion typically allows you to quickly expand your assets, income and market presence.
Inorganic growth is often a result of takeovers, acquisitions and mergers. Retail businesses may choose to grow inorganically by opening new stores and branches.
Any type of business growth has its risks. However, with careful planning and the right strategy, growth can deliver stability, security and long-term profits.
See how to prepare a business plan for growth.