The growth mindset: all concepts you need to know for business success
How do we define a company's growth?
Table of contents:
Business growth is a stage in which a company experiences unprecedented and sustained increases in market reach and profit opportunities. This might occur when a company's revenue increases, more items or services are produced, or its customer base expands.
Growth is the primary goal of the vast majority of businesses. With this in mind, business decisions are frequently made based on what will contribute to the company's long-term growth and success. There are numerous strategies that can help in growth, which we will discuss further below.
Business growth types
As a business owner, you can pursue various avenues for growth:
- Organic growth is a type of business growth that comes from within. It involves increasing sales and revenue through the development of new products or services, expanding into new markets, or improving existing operations. Organic growth is often viewed as a more sustainable and stable type of growth compared to other types.
According to a survey by Deloitte, 88% of executives in the US consider organic growth to be a key priority for their companies. Let’s take Apple, in 2021, their revenue increased by 54% compared to the previous year, mainly due to the success of its new products such as the iPhone 12 and MacBook Air.
- Horizontal growth involves expanding a business by offering new products or services that are similar to its existing offerings. It allows a business to leverage its existing capabilities and customer base to enter new markets and increase its revenue. For example, McDonald's, has grown horizontally by introducing new menu items such as breakfast items, salads, and McCafé beverages, expanding its offerings beyond burgers and fries.
- Vertical growth entails developing a business by acquiring suppliers or distributors or integrating vertically by owning and controlling the supply chain. It allows a business to gain more control over its operations, reduce costs, and increase its competitive advantage. Tesla has grown vertically by owning and controlling its supply chain, from raw materials such as lithium and nickel to the production of batteries and electric motors.
- Strategic growth focuses on long-term initiatives that expand your business, such as developing new products or targeting new audiences. This type of growth requires significant resources and funding, which can often be generated from organic growth efforts. According to a report by Harvard Business Review, companies that had a clear and well-communicated strategy grew 2.2 times faster than those that did not. Let’s take the example of Patagonia, the outdoor clothing and gear company, who has grown strategically by aligning its business practices with its environmental and social values, such as reducing its carbon footprint, using sustainable materials, and supporting grassroots activism.
- Internal growth optimises existing business processes to increase revenue, such as cutting wasteful spending or automating functions. This type of growth can be challenging as it requires companies to improve internal processes rather than relying on external factors. An example of internal growth is a manufacturing company that reduces costs by streamlining its supply chain.
- Mergers, partnerships, and acquisitions, also called as inorganic growth, can be riskier but can lead to high rewards, such as breaking into new markets or expanding product offerings. Successful execution requires careful planning and management. According to a report designed by KPMG, global M&A activity increased by 94% in the first half of 2021 compared to the same period in 2020. The top 20 M&A deals in 2021 have a combined value of over $350 billion.
Business growth strategies: which one fits your business?
Business growth strategy
A growth strategy is a plan developed by a company to expand its business in a specific area, such as yearly revenue, customer count, or product line. Expanding internationally, investing in client acquisition, or increasing a product range are all examples of specific growth methods.
The industry and target market of a company influence the growth strategies it will employ. Strategize, examine your possibilities, and incorporate some into your business plan.
Depending on the type of firm you're establishing, your growth plan may involve elements such as:
- Opening new markets
- Putting money into customer acquisition
- Opportunities for franchising
- Expansion of product lines
- Selling things across numerous channels online
Your industry and target market will affect your options, but new client acquisition will almost always play a significant role. However, before making a specific decision, such as adding new locations, you might implement a variety of overarching growth methods. Let us investigate.
Types of business growth strategy
Your company can pursue a number of general growth strategies. Some tactics may complement one another. A customer expansion and market growth strategy, for example, will normally work hand in hand.
A revenue growth strategy is a company's plan to increase revenue over a set period of time, such as year over year. To boost the bottom line, organisations implementing a revenue growth plan may monitor cash flow, utilise sales forecasting data, study current market trends, reduce client acquisition expenses, and create strategic alliances with other businesses.
- Investing in sales training programs to increase closure rates is one example of a revenue growth strategy.
- Using technology to enhance sales forecasting reports.
- Lowering consumer acquisition costs by utilising low-cost marketing tactics.
- Continuing to train customer service representatives.
- Or collaborating with another company to promote your goods and services.
2. Customer Growth
Customer growth is a type of business growth strategy that focuses on acquiring new customers or increasing the loyalty of existing customers. To attract more consumers, you can track customer turnover rates, analyze customer lifetime value, and use price tactics.
You might also increase your spending on marketing, sales, and customer experience, with new customer sign-ups as the major metric. Customer acquisition strategy may include the following:
- Expansion of your marketing and sales staff.
- Increased marketing and advertising budget.
- Opening new locations in a potential market you haven't yet entered.
- Rolling out new product lines and services.
- Using a freemium or low-cost pricing model.
- Tracking metrics like as churn, client lifetime value, and MRR.
3. Marketing Growth
A marketing growth strategy is an organisation's plan to extend its total addressable market (TAM) and increase its existing market share. It is related but not the same as a market development strategy.
Businesses that pursue a marketing growth strategy will do research on numerous verticals, customer desired markets, regions, and other aspects to establish the viability of market expansion.
Specific marketing expansion techniques may include:
- Rebranding the company in order to reach a new audience.
- Launching new products to penetrate new markets.
- Opening new locations in other regions.
- Using a fresh marketing strategy, such as local marketing or event marketing, to reach out to new markets.
4. Product Growth
A product growth strategy is a company's plan to increase product usage and sign-ups, as well as to expand product lines. This type of growth plan necessitates a large investment in the organisation's product and technical team (in the case of SaaS companies).
A product expansion plan in the retail industry may entail collaborating with new manufacturers to extend your product inventory. Specific strategies could include:
- Adapting your business model and pricing strategy, like subscriptions or freemium services.
- Adding additional features and benefits to existing products.
- Collaborating with partners and service providers.
- Increasing product acceptance by entering new markets and verticals.