Organic Business Growth – a Magic Ingredient in Every Entrepreneur’s Success Story

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When you choose an organic business growth strategy, you are choosing a safer route to growth and success. The most obvious disadvantage is that it is generally slower. Some entrepreneurs prefer to accelerate their growth with a merger or acquisition. Bear in mind that this route is more costly and the risks are higher. If this doesn’t appeal to you, it is perhaps not the right path for your company at present. One thing is for sure, a low-risk strategy looks very appealing during periods when the economy is turbulent.

Benefits of Growing Your Company Organically

Coming back to basics, you might be wondering if you really have to grow your business at all. Why bother, you might ask? One clear reason is talent acquisition. Top-performing people, from your C-suite to your apprentice, will be attracted to your company if they can see that it is growing profitably. Employees will feel reassured that they are joining a thriving workplace that can offer them future opportunities. A company with owners who know what it takes to succeed.

If you decide to look for investment in the future, a track record of organic growth will be very helpful. When your company can show profitable organic growth to potential investors, it becomes an attractive investment opportunity. Organic growth is a sign that the market likes your products or services and your leadership team knows how to reach the right people. If you decide to access funding for future expansion, you’ll have strong credentials to show to banks and investors.

Opt for organic growth in your business and you set a strategy that focuses on harnessing internal resources to achieve success. This model lets your company expand operations without having to borrow money. You also avoid getting involved in takeovers, mergers or acquisitions which can be time-consuming and might feel risky.

If you are unsure which growth strategy is right for your business in the current economic climate, find someone to talk to. It can be invaluable to explore your options with someone from outside your company. Clients often tell us that they really value having their CFO on hand to give fresh insights and a new perspective. You might choose a part-time CFO for this, or you might have a business coach or mentor. No matter who you ask for support, it’s good to hear from someone who can step back and see the bigger picture.

4 Elements of Organic Business Growth

Sanjay Patel is a part-time CFO with The CFO Centre and he’s also a multi-channel retail specialist. Through his many years of experience, he says that he has seen many companies focus on organic business growth and reach their goals. Although internal growth is slower, Sanjay helps clients achieve success by focusing on 4 key areas:

  1. increases in output,
  2. greater efficiency and faster production,
  3. higher revenue growth and
  4. better cash flow.

Sanjay is a champion for organic growth for businesses. He says it will put your business expansion on firm foundations and provide a critical element in the success of any company. This is a truth that applies to all companies, not just those in the retail sector.

Why is Organic Growth Important?

If you can grow a company organically, it is a sign you are providing goods or services that people are keen to buy. Also, it shows that you can profitably supply these goods and services. Investors find this very reassuring, whether they are already involved or looking to come on board. Remember that existing and potential investors will look closely at the way your business is performing. They expect to see that the company is capable of increasing output and earning more than it did in the previous year.

Many high-growth companies grow organically, according to a global McKinsey report. In fact, the study found that organic growth is key to companies’ futures. This might sound a bit contradictory when we’ve already mentioned that organic growth is generally a slower way to grow a business. However, the survey broke down the activity of top performers into 3 main areas:

  • Invest in existing high-growth activities by using funds from a variety of sources;
  • Create new products, services or successful business models; or
  • Perform better by continually optimising their core commercial capabilities such as marketing, sales, and pricing.

The key to becoming a top growth company is to use a combination of all three strategies, according to the survey.

They found that top performers also tend to be better at developing the right capabilities to support their chosen growth strategies. For example, by using advanced analytics and digital customer experience. Although the study focused primarily on publicly listed companies in the US and Europe, its conclusions are just as crucial to both small and large privately owned companies.

Three Organic Growth Strategies for Your Business

Of course, your business might not have the resources that top growth firms do. They can introduce more than one strategy at a time, unlike most companies. Nevertheless, if you want your company to enjoy the benefits of organic growth, then you need to use at least one of the three main organic growth strategies. You should:

  1. Continuously optimise your commercial activities. These are the ones that involve how your products or services are priced, marketed, and sold.
  2. Reallocate funds from unproductive costs or low-growth sectors into activities such as high-earning products or services. Support areas of the business that already perform well to boost earnings and growth.
  3. Create and develop new products or services and develop new business models.

Measure Success

It’s crucial you use data analytics to determine which growth initiative is having the most impact. Such analytics should make it easy to see which organic growth strategy is the most cost-effective in your business.

Sanjay’s experience is that many businesses find it hard to embed analytics into their company’s most critical commercial processes. Like all our part-time CFOs, he helps clients set up their reporting. With fast access to your analytics, you can leverage these insights to make timely decisions. This allows leaders in an organisation to make important strategic decisions in the moment.

Why Knowing Your Target Market is Critical

Thorough knowledge of your target market is essential for long-term organic growth. Without it, it’s unlikely you’ll be able to increase your market share.

If you know how your target customers or clients think, behave, and make decisions, you’ll know in which products and services you need to invest most of your funds.

Your research should make it easier to know what new product lines or services will appeal to your target market. Then you can tailor your marketing efforts and the pricing of your products or services towards your ideal customers. They’re the ones who buy the most products most frequently.

Social Media Marketing

Use market research to find out where you can reach your customers online. If, for example, the research reveals that most of your customers come to your online retail shop via recommendations they find on social media, you know this is an area where you should invest. You might focus your efforts on social networks such as Facebook, Twitter and Instagram, blogs, vlogs, forums and consumer review sites.

This insight could mean you decide to focus most of your marketing efforts on getting more organic sales via social channels. You might decide to reach out to more social media influencers and produce SEO (search engine optimised) content for other people’s blogs and vlogs, as well as your own blog and YouTube channel.

The deeper your understanding of your target market and ideal customers, the easier it should be to identify potential markets. Then you can invest in product line extension and create future revenue streams.

Becoming more effective at generating sales and annual revenue should result in better top-line figures. It’s also important for your company to become more efficient in spending and managing your operating costs.

The Organic Business Growth Mindset

To be one of the top growth companies, your business needs a growth mindset, as opposed to a fixed mindset. The fixed mindset organisational culture is based on the idea that personal traits are fixed. It assumes that natural ability is unchangeable and it can create a culture that limits people and their creativity.

Organisations with a fixed mindset tend to reward ‘genius’ type employees, the ‘star’ performers. They overlook so-called ‘underperformers’ and miss opportunities. Such organisations by their very nature hinder rather than encourage growth.

A growth mindset is based on the belief that everyone can increase their ability, talent, and intelligence, given the right opportunities to learn and be curious.

Organisations that share a growth mindset are more adaptive and flexible and, therefore, more agile – the very qualities that a company needs to be able to take advantage of new growth opportunities.

At The CFO Centre, we’re passionate about working with people who have a growth mindset, as you’ll discover when you meet our adaptive, flexible, and agile CFOs. These people work flexibly as individuals or as a team to deliver outstanding support to our clients. If this sounds like something you’d like to explore, why not get in touch to book your no-obligation discovery call with one of our team? Call us today on 0800 169 1499.

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