Organic growth: the basics
If you feel you're at a comfortable level with the business but
want to take things further, increase your turnover and make more
profit, it's a good idea to look at different ways into expansion.
Having a clear idea of how you want to grow gives you a much better
chance of expanding successfully and staying in control. This guide
looks at organic growth, one of the most common and
straight-forward types of expansion:
- What is organic growth?
- How to grow organically
What is organic growth?
Organic growth means expanding your business and increasing
turnover by carrying on doing what you're doing, rather than
through acquisitions (buying other businesses) or through moving
into new markets. You might move into a new geographic region or
use a new sales channel, but you're still using your original
business model. You don't force growth with outside investment and
the rate of growth is more natural - hence the name organic. You're
just trying to increase sales.
- Expanding naturally rather than through acquisitions or new
- You use original business model
- Growth rate is natural, not forced
Organic growth is typically much safer than rapid growth or
growth through mergers and acquisitions, because you're using a
tried-and-tested business model. It gives you the opportunity to
test your model thoroughly before moving onto another one. It's
also easier on your finances. You can achieve growth organically by
reinvesting profit back into the business, so avoiding the need for
outside investment - and the pressure from shareholders that often
comes with it.
- Safer as using tried-and-tested model
- Easier on finances and avoids need for outside investment
Organic growth often takes longer than more aggressive
strategies for growth, so if you're looking to expand very rapidly
it may not be for you. You may also find it limiting if you're keen
to try out lots of different business models and new ideas. Some
business-owners also thrive on having outside investment and the
pressure as well as the guidance that can come with it.
- Usually takes longer
- Can be limiting
- Some business-owners prefer having outside investment
How to grow organically
You can achieve organic growth by selling your products in new
geographic areas, or using new sales channels, such as through a
wholesaler or website. Try to ensure that new channels or areas
create more sales, rather than simply shifting existing customers
from one channel to another. You can also look at selling to new
customers, and selling more product or new products to existing
- Selling in new areas or through new channels
- Selling to new customers or selling more to existing
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