It’s drummed into all business owners that growth equals success. But what exactly is business growth and how do you know when it’s the best time to push for it? As part of our ‘summer of growth’ series of blogs, let’s delve deeper into growth.
Why is business growth important?
Growth is important to the long-term survival of a company. It drives business performance and profit, making possible new acquisitions, recruitment of talent and investments. Growth can help a company to take full advantage of new opportunities and increase market share through innovation and differentiation from competitors.
Growth usually comes with expansion – an increase in sales, employees and a strengthened market position. There is no one metric for measuring growth and there are several elements that contribute to growth which don’t necessarily all happen together, such as:
- Sales
- Profit
- Company value
- Revenue
- Employee numbers
- Customer numbers
Defining growth can be tricky when some of these metrics can increase and others not, for instance, a business may increase customer numbers but decrease profit because of discounted pricing. So, it’s important to identify and measure the growth drivers that are most relevant to each business. For some businesses, growth will happen quickly, for others it’s more beneficial to increase revenue and sales more slowly to avoid cashflow issues.
How does growth differ for new or established companies?
Start-up businesses tend to grow faster as they develop and strengthen their market position to earn revenue to cover costs. Growth in more established businesses tends to slow down and focus on profit through efficiencies to make sure the business is protected and stable.
What are the factors that help a company grow?
Even if a business is seeking organic growth, systems and plans are needed to drive this, such as:
- A growth strategy
Your business plan should include strategies to drive growth, like attracting new customers, expanding a product range or testing new markets.
- Targeted funding
A growth strategy often requires additional funding to push it through. New staff and equipment may be needed and growth is unlikely to happen without funding for this.
- Motivated people
A growth strategy is useless if it isn’t implemented by a workforce that is fully committed to growth too. Employees need training to give them the relevant skills to support the strategy.
- Infrastructure and processes
With the right strategy, funding and people in place, new processes will need to be implemented to facilitate growth. This could include IT and software or storage space for new products.
Whilst growth can boost a business’s credibility and increase stability, to be sustainable it needs to be strategic. If you’re considering different strategies for growing your business, why not seek the advice of the experts at CRM? With years of looking behind the numbers, the team can provide guidance on all aspects of company growth. Visit www.crmoxford.co.uk or call 01865 379272 for details.
