What Does Growth Mean in Business?
Business growth describes the process of expanding and increasing the scale of a business’s operations over time. This can present itself in many ways, such as an increase in revenue, profits, market share, and employee headcount. Business growth is not a one-size-fits-all concept and can take on many different forms depending on the goals and strategies of the business in question.
At Firestarter, we’re interested in getting things going to really ignite and sustain business growth. Whether we are working with large corporate organisations or SME business leaders, growth can be achieved in many ways and is essential for any business to succeed over the long term. It is frequently viewed as a crucial step for businesses to maintain market competitiveness and customer relevance.
Types of Business Growth
To drive sustained growth in any business, you need to have a strategic plan and consider different types of growth, each with their own set of advantages and disadvantages. Let’s take a quick look at some of the most common forms of growth:
Organic growth refers to the process of expanding a business’s operations internally, without relying on external resources. This can involve increasing production, developing new products or services, or expanding into new markets.
This can be a slow and steady process, but it can also be one of the most sustainable and cost-effective ways to expand a business. It allows a company to maintain control over its operations and can be a reliable way to increase profits and market share over time.
Internal business growth is the process of growing a company from within by using a variety of strategies, such as increasing market share, introducing new products, and entering new markets. Unlike the other types of business growth, Internal growth Instead concentrates on output produced from the internal operations of the company. It seeks to improve the company’s workflow by making better use of the available resources.
By combining both organic and internal growth tactics, this helps a business to develop strategic growth. It entails identifying and pursuing development opportunities that are consistent with the organisation’s long-term goals and objectives.
A business can prioritise its resources and investments through its strategic growth plan, this can result in a more focused and intentional approach to corporate success. Moreover, it can aid in making sure that the company’s expansion is sustainable and consistent with its overall goal and vision.
Mergers, acquisitions & collaborations
The process of growing a company’s operations through mergers, acquisitions, or collaborations with other businesses is known as inorganic growth. This type of growth can be a quick and effective way to increase market share and revenue. For companies with the means to cover the expenses of mergers and acquisitions, it can be seen as a workable strategy. It may also be a quick way to enter new marketplaces and markets of consumers without starting from scratch.
Mergers and acquisitions can be complex and involve significant legal and financial considerations. They can also be expensive and risky, as the success of the deal may depend on factors outside of the company’s control.
Business Growth Strategy
Many business leaders know what they want to achieve, but don’t have the necessary skills or internal resources to drive progress. Therefore, developing a business growth strategy is essential for any company looking to expand its operations. The strategy should outline the company’s goals, objectives, and plans for achieving them.
At Firestarter, we believe that developing your business growth strategy should be a quick and simple process that clearly identifies your headline strategic intent (for one, three and five years), your ‘strategy on a page’ that highlights the requirements for your primary business operational areas, and a ‘Vital Few’ list of key actions that you really need to focus on to drive the required growth.
When developing a plan, it is important to consider many factors such as your company’s internal resources, products, finances, sales, market, and competition. This can help to ensure that the strategy is feasible and aligned with your overall mission and vision.
Writing a Business Growth Plan
At Firestarter, we are often asked about practical business planning methods to drive business growth and prosperity. One of the key issues to address is planning with confidence in order to deliver your goals, and this starts with a business growth plan. Most business leaders understand the key principles of business growth planning, but need our help with turning strategic thinking into practical and executable plans that can provide a framework for growth. Writing a plan involves several key steps, including:
Defining your goals
The first step is to define the company’s goals and objectives. This should include specific targets for revenue, profits, market share, and other key metrics.
It is important to ensure that these goals are realistic and achievable, based on the company’s resources and market conditions.
Review your competition
The next step is to review the growth plans of your competitors. This can help to identify potential opportunities and threats, as well as areas where the company can differentiate itself from the competition. It is important to conduct a thorough analysis of the competition, including their strengths, weaknesses, and market share. This can help to inform the company’s growth strategy and ensure that it is competitive and effective.
Assemble your team!
An important stage in creating a plan that drives business growth is by using your team to help with strategic planning. Those with knowledge in diverse fields, such as finance, marketing, operations, and technology can all help to play a part.
The team should work together to develop a comprehensive growth plan, they should also be responsible for executing the plan and monitoring progress over time.
Business Growth Planning Template
Business growth planning templates can be useful tools for companies looking to develop a comprehensive growth plan. At Firestarter, we have developed a Strategy on a Page process that helps business leaders to drive their business growth planning step by step. Download our Stop Planning Paralysis guide to find out more.
How to Measure Business Growth
It’s all very well having a growth plan, but the really important part is executing that plan and measuring performance so that you can evaluate its effectiveness (and make changes along the way if necessary). As mentioned above, you can use many different methods to measure business growth (turnover, profit growth, market share, employee numbers etc.) but we have highlighted an example using a very simple company growth rate formula as below:
In this example we want to work out the growth of ‘Acme Industries’ over a two-quarter period. We will use Q1 and Q2.
For example, Acme Industries generated £50,000 of revenue in Q1, and £75,000 in Q2. To find out the growth rate you first need to calculate the difference between Q1 and Q2:
(£75,000 – £50,000 = £25,000)
You then need to divide the difference by the revenue generated in Q1 and change the figure to a percentage (£25,000 / £50,000 = 0.5 = 50%). This puts Acme Industries quarterly growth rate at 50 percent.
If business owners are planning for growth, they can begin their change management processes to prepare for factors such as, hiring the right staff or investing in new technology. The scale of these changes should be based on your measurements for businesses development.
The sustainable growth of a business is a vital factor for any company looking to remain competitive and relevant in the marketplace. For businesses of all shapes and sizes, there are common challenges and barriers to growth – at Firestarter we use our tried and tested methods, tools and processes to formalise a growth strategy, develop a plan, then really get ‘stuck in’ with our clients, applying our principles of rhythm and rigour to get things done and achieve results.
Every business wants to achieve growth. We spot the opportunities and execute the right strategies to delivery growth and profitability, whatever your business. Get in touch with us to find out more.