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Keys to organic growth in business
You’ve started your own business – now how will you make money?
Do you want to be a business owner, not just an operator? Do you want to use your business to live the life of your dreams? Are you an entrepreneur planning your exit strategy so you can build another business? To achieve any of these goals, you’ll need to do one thing: Grow your business.
There are many ways to expedite the growth of your company. You can pay for outside agencies to market your product or service or set up cross-promotional plans with other businesses. There are also ways to kick-start organic growth in business. But what is organic growth and how can you make it work for you?
What is organic growth in business?
Organic growth refers to the growth of internal sales and revenue. It focuses on expanding your company from within, targeting your in-house processes as a means to drive growth and revenue. With organic growth, you use leverage – of your existing relationships, skills and knowledge – in order to expand your market share.
Examples of organic growth include adding new customers, increasing your average order values, improving retention and repeat purchases and optimizing your internal operational processes. Some ways that you might achieve organic growth in business are to introduce new products, improve existing products, reallocate your resources or optimize your pricing structures or market segmentation.
Difference between organic and inorganic growth in business
Unlike organic growth, which relies on resources you already have, inorganic growth is the process of obtaining new resources or taking advantage of outside opportunities. The most common examples of inorganic growth are mergers and acquisitions like leveraged buyouts, or partnerships like joint ventures.
The biggest difference between organic and inorganic growth in business is that inorganic strategies typically spark an immediate jump in growth, while organic strategies are more long term. Those in the early stages of the business cycle typically need to focus on organic growth in order to build their company, and then can begin to leverage some inorganic strategies.
What are the benefits of organic growth?
Steady organic growth is a sign of a healthy company. When you have organic growth, it means your business processes and brand are aligned in a way that makes success much more achievable. Organic growth is typically lower risk, as it’s financed with your own revenue rather than from outside sources. And, it’s easier for you to control as the business owner.
So what is organic growth to your business? Done right, it’s a way to create sustainable long-term growth, lower your costs, improve your economies of scale and unlock new efficiencies.
How to achieve organic growth in business
There are a few ways to achieve the benefits of organic growth, like training your sales team, implementing new customer service techniques or providing a new and improved service or product. Here’s what you need to know to bolster your growth as a business organically.
1. Focus on the customers you have
When you hear the word “grow” in business, you might also be thinking about the word “sell.” Your first instinct could be to bring in tons of new customers or create an entirely new product to become a disruptor in the industry. However, in most cases, that’s not a sustainable way to grow. Instead, think about the customers you already have connections with.
Could you be selling them additional services? Would a package deal on your existing services make this more possible? When you do bring on new clients, don’t think of it as a huge process. You don’t need to bring on 60% more clients – you probably need to bring on 15% more clients who are purchasing a larger amount of goods to achieve organic growth in business.
2. Know your clients’ needs
The key to organic growth is knowing your clients’ lifestyle and needs. After you’ve answered the question, “What is organic growth in business?” the next thing you must ask yourself is, “What business am I really in?” For instance, think of Blockbuster. The now–defunct video rental company thought they were in the business of providing movies, but really, they were providers of entertainment.
When Netflix opened, Blockbuster was unable to anticipate the changing needs of their customers. Although Blockbuster had developed a huge following, they didn’t continue to think about what would best serve their clientele. They were out of touch with their clients’ needs, and that gave Netflix an opening to revolutionize the industry.
3. Be able to provide value
The lesson? Provide value to your main demographic to create customer loyalty and ensure organic growth. Netflix was able to completely wipe out Blockbuster because they saw the value in customers being able to receive movies at home. They then went on to refine their product, changing from a mail-in service to streaming, and continue to anticipate the growing needs of customers. Now with their own production team, Netflix creates innovative movies and shows that touch on current hot topics.
Ask yourself, how does your company add value to the lives of its customers? What can you do to make the lives of your target audience easier? How can you take your product or service from the level it’s at to the next iteration? That’s the true key to organic growth in business.
4. Focus on a niche
For steady organic growth, you really need to know your customers and/or clients. That’s where developing a niche comes in. It’s much easier to get to know your customers when they share many of the same characteristics. It’s more difficult when they’re all over the board because you’re everything to everyone.
As you hone in on your niche, make sure you choose one that is a combination of something you’re passionate about, as well as one that is profitable. This combination will make your work enjoyable as well as successful.
5. Make sure you have a differentiator
Those businesses that achieve organic growth have found something that sets them apart from their competition: a differentiator. A differentiator is necessary to stand out and make your mark on the industry. You could launch a product with a feature that no one else has or you could have a normal service that is conducted with your own unique flair. Whatever it is, it has to add value.
6. Showcase your expertise
You are an expert in your niche industry, right? Otherwise, you would not have gone into business for yourself. Organic growth is reliant upon your sharing that expertise with as many potential customers as possible. You can do this through social media, on your blog or in person by conducting seminars or workshops. Once your audience recognizes you as an expert, organic growth will naturally follow.
Pursuing organic growth in business is all about looking inside your company. Ask yourself these questions: How am I finding and treating my customers? What are we providing and how does it cater to the needs of our target audience? Then implement one or more of the suggested strategies and watch as your business takes off.