What is Business Growth? [A Guide for Small & Midsized Companies]
What is business growth? If you're a small or medium-sized company, the first step is understanding the definition of business growth. Then it's learning how to better achieve and maintain the growth you want.
How to Define (and Achieve) Business Growth for SMBs
This is the ultimate guide to defining what is business growth and development for small and medium-sized companies.
If you want to:
- Be a growth-driven company,
- Zero in on types of business growth and why they're important,
- Build what ultimately is a better business growth plan for your company,
… then you'll love this guide. Let's get started.
What's Covered in This Guide
Click on each to jump to that section.
- What is Business Growth?
- How Do You Define Business Growth for Your Company?
- What are the Types of Business Growth?
- Why is Business Growth Important for Small Companies?
- What are Growth Strategies in Business? [4 Types]
- How Can You Enhance the Growth of the Company? [6 Tips]
- How to Maintain Business Growth and Measure Progress
What is Business Growth?
Business growth is a stage of a company's lifecycle that is triggered by increased:
- Customer base
- Market share
- Opportunity to generate equity value
- Expansion of operations and other aspects of the organization
Business growth is an important goal for many entrepreneurs, and it's:
- The catalyst for transforming a start-up into a small business, a small business into a medium-sized company, and expanding an organization from there.
- Why leaders create plans and objectives that work together to align with the strategic vision they have for their companies.
- A critical factor that influences the success of any company.
A complete what-is-business-growth definition includes the idea that growth is something that must be measured to determine if it's happening. Whether it's impacted by leadership decisions, business opportunities, consumer trends, or something else, business growth starts with improved metrics that indicate success. That's why companies will implement a business growth plan to measure growth's progress.
How Do You Define Business Growth for Your Company?
Do you want to grow your business, or do you want to run a growth-driven company? Defining business growth for your own company comes down to understanding the difference between the two.
- A growing business focuses primarily on fast growth.
- A growth-driven business focuses primarily on sustainable growth.
Here are four considerations to help you assess whether you're a growing business or a growth-driven business:
1. How do your marketers and sales reps get along?
Sometimes marketing thinks sales doesn't get that the content they create can persuade people to buy. Sometimes sales thinks marketing doesn't get how their strategies work to create selling opportunities.
A growing business may only want to pursue the quick sale, regardless of whether marketing and sales are at odds. A growth-driven business knows when marketing and sales align to accomplish compatible goals, it's more likely that improved sales will follow. The organization can build and maintain long-term business growth.
2. Have you made any investments in technology lately?
Growth-driven businesses are prepared for the future with a robust plan for enabling technological advancements. Growing companies may have to wait until a crisis happens to invest in new technology if their plans are focused only on growth.
3. How are you establishing your customer base?
If you're gaining customers and new markets by following the customer journey, you're thinking like a growth-driven company. You have a plan to keep those customers for the long term, which will vastly improve your overall success.
If you're only working to gain customers and new markets quickly, you're thinking like a growing company. You may not have a plan to retain all those new customers. You may lose out on growth in the future.
4. What is your customer experience like?
A growing business may want to acquire new customers as fast as possible and focus less on a customer's experience in the short term.
A growth-driven company will want to understand the motivations of a new customer and use that to improve growth. They understand that creating a great customer experience is key to keeping them as customers long-term. They will align the customer experience with their brand and growth goals. It establishes a deeper connection with the customer based on mutual values.
Understanding who your customer is and what they need will help you uncover new opportunities for growth.
What Are The Types of Business Growth?
Small and medium-sized companies can achieve growth in four different ways:
Organic growth happens when a company creates a favorable environment for expansion. New and small companies will start adding physical space and staff to accommodate increasing product and service offerings.
When companies focus on improving core processes and available resources to enable expansion, they're building internal growth. This often occurs after measurable organic growth. It's a period of fine-tuning and preparation for strategic advances in future growth.
Companies focus on strategic improvements that help increase long-term growth. They will use the tangible results of organic growth and the purposeful results of internal growth to create more growth. Like investing in new and better products for new markets.
A company can create growth by partnering with a company, merging two businesses, or acquiring another company. It's a collaborative way to enable growth with a high potential for reward.
Companies approach business growth by using a variety of tactics. They can:
- Generate more success within their current market by increasing brand awareness.
- Reach a new type of customer in their market with their current product and service offerings.
- Focus on one segment of an industry to gain market share.
- Introduce new products or new product features to create more value in their offerings.
- Integrate another aspect of their product or service production process into their business model.
- Improve core processes to increase productivity and improve value.
- Expand operations to new locations.
- Focus on retaining current customers with high-quality service.
- Diversify with new product creation for an entirely new market.
- Offer their products and services through new distribution channels.
- Make operational changes that create more opportunities for growth.
- Invest in other organizations as a stakeholder.
Why is Business Growth Important for Small Companies?
As a result of strong, sustainable business growth, small companies can:
1. Hire and retain more people.
When a company can put the right people in the right seats, production can be expanded, customer experience capabilities can improve, and new opportunities can be created.
2. Enter new markets.
When a business can expand beyond an initial customer base, it creates additional growth goals for leaders and teams, research and development, human resources, and more.
3. Gain competitive advantage.
When a company has an edge over the competition, it is much easier to win a larger share of the market.
4. Create more value.
When a business creates new products and services, it leads to better outcomes and improved profitability.
What are Growth Strategies in Business? [4 Types]
The four classic growth strategies in business are product development, market development, diversification, and market penetration.
1. Product Development
This strategy takes advantage of an existing market by creating new products and services designed to attract a specific customer base.
An example of product development is a body care product line expanding into hair care.
2. Market Development
This strategy introduces a company's existing products and services to new markets.
An example of market development is a motorcycle manufacturer opening a showroom in a new location or another country.
This strategy balances high risk with high reward by introducing new products or services to a new market.
An example of diversification is an industrial products company making hand sanitizer for healthcare organizations.
4. Market Penetration
This strategy finds ways to use existing products and services to increase market share.
An example of market penetration is a tech company lowering the price of its best-selling product and marketing it industry-wide.
How Can You Enhance the Growth of the Company? [6 Tips]
For companies to achieve growth, they need the people, the strategy, the plan, the processes and infrastructure, and the resources to make it possible.
1. Put the right people in the right seats.
The people that populate the company workforce must be ready, willing, and able to drive growth.
2. Prioritize growth with a strategy.
Find a way to focus on creating growth, which will also create value for the company.
3. Write a plan for growth.
Map out how to measure actionable outcomes and predict success.
4. Facilitate growth through processes and infrastructure.
Do what must be done efficiently with the tools and resources that enable expansion.
5. Invest in what's needed to drive great outcomes.
Companies at all levels need the right amount of capital and other resources to drive business growth.
6. Improve your core processes with the right company-wide platform.
The tools in Ninety help small and mid-sized businesses grow and scale by improving accountability, tracking data to make informed decisions, and staying connected, engaged, and productive.
With time and consistency, Ninety can help you get on track with things that will lead to business growth. Ninety's interconnected tools help you:
- Track data and measurables and use that information to make smarter decisions and set better goals.
- Communicate and share critical information easily.
- Reduce miscommunications, missed deadlines, and wasted time.
- Improve company-wide transparency so that everyone can perform better.
- Increase accountability, improve productivity, and support personal initiative.
- Guide teams through feedback conversations, meetings, and planning sessions.
- Create a strong company culture of transparency, accountability, and collaboration.
- Work smarter, not harder, with support along the way.
How to Maintain Business Growth and Measure Progress
How do you know your company is growing? Look first to your company goals and establish which metrics will show whether you're attaining them or not. Track those. They could include:
- Number of quality leads, customers, and repeat customers
- Sales, revenue, and profits
- Number of employees, new hires, and retained
- Value of the company in the market
Create Your Business Growth Plan on Ninety
Now that you've learned about what is business growth, it's time to put your knowledge into practice:
Want more step-by-step guides and actionable tips on planning, tracking, and achieving business growth? Subscribe below to the blog.