Types of Business Growth Explained

Business growth is?a phenomenon that occurs when business owners, employees, and outside factors influence the success of a company. A business grows when it expands its customer base, increases revenue, or produces more products.

Businesses of any size look for ways to expand their market share and increase revenues. Companies often choose to implement specific growth strategies to advance their business. Understanding these strategies can help you lead strategic initiatives for company growth. In this article, we explain the types of business growth strategies used by companies today with ideas to help you grow your organization.

What is business growth?

Business growth is a phenomenon that occurs when business owners, employees, and outside factors influence the success of a company. A business grows when it expands its customer base, increases revenue, or produces more products.

Growth is the goal of most businesses and is the reason behind many decisions that affect the daily workings of a company both internally and externally. Business growth is impacted by consumer trends, market opportunities, and decisions made by company leadership.

Growing a business takes planning and concentrated efforts that fall into these main categories:

• Organic:?Organic growth happens when a business creates the right conditions for expansion. This includes physically expanding office space to allow for company growth or increasing product offerings.
• Strategic:?A strategic approach focuses on long-term growth through specific initiatives. Businesses often move into this growth stage after a period of organic growth. Companies may try to gain a share in untapped markets or plan to produce new inventory.
• Partnership/merger:?This type of strategy occurs when a company joins with another business to create more market opportunities.
• Internal:?An internal growth strategy is one that works to maximize internal processes to increase business and revenue.

14 types of business growth strategies

Here are the main tactics businesses can use to expand their market share, revenues, and internal processes:

Market penetration

Market penetration occurs when a business tries to generate further growth within its current market. To do this they may try to lower prices or increase marketing efforts to gain more market share. Increasing brand awareness can be an effective way to implement this strategy.

Product development

Businesses may choose a growth strategy that involves innovating current products or creating new ones to increase revenue. Some companies choose to take existing inventory and add new features to attract more customers. Investing in the design and creation of new products is one-way businesses foster growth.

Market expansion

In the market expansion method, a business tries to expand in its current market by reaching untapped customer bases. For example, an office supply company may try to gain market share by selling to educational institutions, healthcare organizations, and government agencies instead of strictly selling to corporate office clients.

Vertical integration

Companies that decide to grow through vertical integration strategies take on another part of the manufacturing or distribution process. This may mean that a company begins to produce its own packaging materials or buys a factory that produces a key item for a product.

Productivity and efficiency

Some businesses grow by changing their processes to increase productivity. Efficient production methods can help cut costs and increase revenue. A business may choose to conduct an audit of its manufacturing processes, distribution methods, and other parts of its production chain.

New geographies

Investing marketing efforts into expansion in other locations can also be a growth strategy for businesses. This can mean regional, national, or even worldwide expansion of product offerings and distribution. Offering products outside of a current geographical area can generate new revenue streams if the distribution is also handled effectively.

Share of wallet

By focusing on customer retention and quality service, companies can initiate growth by expanding sales to current customers. Selling to existing customers typically costs less than other marketing efforts. This strategy can be effective for companies with excellent customer service practices and a loyal customer base.

Diversification

Companies that choose to grow through diversification create new products for a completely new market. This kind of growth may mean moving into international markets or areas where the company has no prior sales history. Some companies do this by looking for areas of large-scale expansion, hoping to gain market share. Diversified companies may own a stake in multiple industries through a range of product offerings.

Acquisitions

Companies may implement a growth strategy by buying another business. A company might buy out a competitor to absorb its market share and acquire its assets. The parent company will then experience growth in sales and revenue. This strategy encourages more immediate growth because a business is essentially buying into a market instead of having to invest time in organic growing methods.

New channels

Offering products through new distribution channels is another way for businesses to expand. For example, a company may decide to offer products in retail stores after operating exclusively online. A company may also decide to work with consumers instead of selling just business to business.

New business models

Changing the way you do business can affect growth patterns in a company. When a business decides to make operational changes, they have the chance to create more growth opportunities using other strategies.

Investment

Owning shares and investing in other companies may be a way to expand business growth. When a company uses its revenue to increase the assets of another business, they have the opportunity to receive benefits as a stakeholder. This may include dividends, stock options, or other investment earnings.

Market segmentation

By focusing on a small segment of the industry and growing specifically in that area, businesses often find growth opportunities. Small businesses can benefit from this strategy in markets where big businesses already dominate a large portion of the market share.

Business partnerships

Strategic partnerships can increase business growth by leveraging the key elements of two or more brands. In this strategy, businesses often create a contract with clear terms outlining the agreement for both parties. Companies from different industries or markets benefit from gaining the attention of another consumer group.

Tips for helping your business grow

Here are some ideas to help expand your business:

• Understand your audience:?One way to encourage growth is to get to know your customer base. Find key demographic information by analyzing data from multiple sources. Look for ways to track your customer's buying preferences or service contracts. Once you understand this data, you can drive decisions that impact revenue such as product offerings, market share, and regional expansion.
• Focus on leads:?Lead generation is a key way to grow a business. Securing leads both organically and through specific marketing efforts can increase sales and generate more brand awareness. Lead generation has a direct impact on sales once a lead converts to a client.
• Create a vision:?Leading company growth with a vision creates a clear path for a business to expand. Since growth is more likely through targeted efforts, creating goals that set up specific initiatives can help everyone in an organization work toward accomplishing the same objectives.
• Strategize your brand:?Build trust with consumers by connecting customers to your brand. Making a plan to utilize social and other platforms can help expand your business too.

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