Growing a business is a strategic goal for many ventures, but it isn't always easy. You should only grow your business when you have clear reasons to do so and the right indicators show that you are ready to achieve and sustain growth.
Reasons to grow your business
There are several reasons that motivate most businesses to grow. These include:
- higher profits - increase in sales usually leads to more revenue
- more customers - volume of customers may give you greater security
- cost savings and efficiencies - through economies of scale
- greater market dominance - to guard against smaller competitors
- risk mitigation - through diversification of production and sales
When is the right time to grow your business?
Over their lifespan, businesses go through several phases. It takes a while to start a business and get it established. Then you need to decide whether to continue to run your business as it is or to grow it. This will partly depend on your business goals and exit strategy.
Trying to grow too early or trying to grow when your business is busy with other things - eg the development of a new product - can be a mistake. Make sure that if you do decide to grow your business, you expand at the right time.
Types of business growth
As well as your timing, it is also important that you choose the right sort of business growth. You can grow organically by selling your existing products to new markets or by selling new products to your existing customers. Alternatively, you can grow rapidly by buying another business. See more on types of business growth: rapid and organic.
SWOT analysis for business growth
To make sure that you go for the right sort of growth, at the right time, you need to work out how your business is currently performing. There are several ways to do this and one way is to perform a SWOT analysis, which stands for:
See a SWOT analysis example.
As well as analysing your own business, you should examine the market you operate in and your competitors. See how to measure performance and set targets.