Internal growth strategies for small businesses decoded.
What is internal growth strategy definition? Internal growth, otherwise also known as organic growth, is how a company grows on its own ability. It occurs when a company uses its already existing resources and capital to grow. Often, in such cases, a business consumes a lot of its resources without borrowing anything from outside to expand its operations and grow the company.
This includes increasing production value, creating new products or services, or focussing on other developmental strategies. Before jumping into anything, the business owners must evaluate the company’s growth potential, conclude a strategy and then only implement the growth plan. However, internal growth is generally viable and can help improve the company’s overall growth. Once the time is right, it should be the natural path to follow for any company’s growth trajectory.
Growing internally or externally helps you accomplish the same objective of increasing a company’s profit, market share, and size. First, however, let’s see how they differ and which one can be best suited for your company’s current profile.
Internal Growth VS External Growth Strategies
What is internal growth? Internal growth is the organic expansion of a business through calculated decision-making. This will increase a company’s size, profits, and customer base.
Organic growth is created by adding a new clientele base or extracting more business from current clients. It’s, in essence, growing your sales from within using the resources you have, including skills, data, capabilities, connections, and other tools. Organic growth is primarily the preferred way for a firm to expand and reflects a long-term, rock-hard guarantee to building a business.
According to internal business growth strategies, you grow your business internally by adding new clientele and intensifying the volume of business you already have with your existing clientele. Essentially, you are using all the existing resources your business has to grow your business exponentially. These resources can comprise your experiences, your knowledge gained over time for sustaining the business.
However, using only internal means to grow a company means growing at a very measured and organized pace. This also is another way to say that business is likely to have slower, gradual, and progressive growth.
External growth is also known as inorganic growth. It occurs when the company decides to collaborate with another organization to achieve its objectives. Most commonly, this type of growth materializes through mergers or acquisitions.
This kind of growth heavily depends on assets. The most extreme practice of inorganic growth is the takeover, which will, in turn, expand its size and churn up the sales. External growth does provide several rewards, but it also limits the amount of control the original owner upholds.
Trusted Internal Growth Strategies
In order to grow and achieve its goals, the business can consider these five internal growth strategies for internal growth:
Growth is an ongoing process. It won’t happen overnight. One of the best approaches to organically growing a business is to aggregate the production of your company’s current product or services. This is predominantly convenient if there’s a vast demand for your product or services, and you know that increasing production will increase sales.
Take the time to evaluate your sales numbers before increasing production since this strategy is one of the most expensive and long-lasting. However, if effective, it can result in some of the utmost heights of internal growth.
Introducing New Products
One of many other ways to internal growth strategy is introducing a new product or service to market. Based on the market you’re operating in, there may be an obvious track to go on, while for some others, you may have to think more artistically. Irrespective, introducing a new product to the marketplace can attract a new customer base and increase the overall turnover and value.
New product development is a big step up, but it is undoubtedly a practical internal growth strategy. Make sure your company accurately researches the earning potential of a new product before committing to expansion.
Conquering New Markets
Establishing your mark in a new market is another internal growth strategy many companies use when trying to grow. A new market is a section or demographic of people which your company hasn’t captured yet. Capturing new markets is one of the most cost-effective ways of encouraging organic growth. It doesn’t involve a lot of research and development.
A brand can use niche marketing to be noticeable, seem more valued, reach its maximum efficiency, and build a strong audience network. Focusing your marketing efforts on different demographics allows you to include a new group of people in your current geographic reach.
Emphasize On A Niche
Doubling down on a well-defined niche allows you to reduce marketing costs. It pushes you to focus on a specific targeted area while increasing market share and profits. When research is done right, the answers can get you to focus on a particular niche. As a matter of fact, some research shows that firms with high growth are 75 percent more likely to have a well-defined niche.
Once you have researched enough to start implementing, you can think more clearly about what type of niche you want to conquer. Some may say that it’s a little unconventional to narrow down when trying to grow your business initially. However, when you have your niche well-defined and concentrate on it, your marketing costs will go down significantly. Your competition will also go down tremendously. On the other hand, the company’s profits and market share will be at an advantage. It’s just a plain case of being the biggest frog in the puddle.
The highest growing companies out there have a razor-sharp concentration on a single niche. They choose what they want to do, and then they focus on conquering it better than anyone else. While doing so, they develop rapidly and leave their competition biting the dust.
Another way to expand your insights for niche marketing is to aspect closely who your target audience is and recognize what they want and fulfill the need. Recognizing your ideal audience can help you offer them better services or products any which way you can.
Don’t Close Your Eyes To Present Customers
Your current customers are an irreplaceable cause for your organic growth. Many companies make the mistake of concentrating too much on clocking new customers to the detriment of keeping their old customers. Don’t assume that just because they are your existing customers, they will stay your customers for the rest of the time. You need to continue to build upon the customer relationships you’ve had so far. Doing so will help retain the customers’ trust and loyalty. This will help your company not only to continue doing business with them but also maintain the relationship.
Optimize SEO For Your Website
SEO (search engine optimization) is an inward-bound marketing strategy that will help drive long-term organic growth. When your company’s website is accurately optimized for SEO, the pages of your website are more likely to be indexed by Google and ranked highly on the search results (as long as the quality of the content is good).
Your pages will perform better and rank higher up on Google’s SERP (search engine results page). People who search for similar queries, including the keywords you’ve used when optimizing your website, will see your website as a result.
Keeping your site optimized well, as a direct result, will help to drive organic traffic over time and start showing growth results. Proper SEO optimization requires you to have a technically well-built website, high-quality backlinks, and the use of appropriate and relevant keywords to rank well in search results.
Convert Your Traffic to Sales
Having a good call to action (CTA) is crucial for growing your business organically and increasing online sales.
A good CTA is when your audience voluntarily wants to take action and be a client. It also acts as a differentiator, appealing to your target customer and offering the value they haven’t gotten anywhere before. When you start to drive website traffic, you need to hit this traffic with an invaluable proposal to convert them into a customer.
While optimization is a great tool to drive traffic, it’s also your job to keep that traffic sticking around and coming back around for more.
To achieve this, you’ll need to shape your calls to action that stays with your readers. For example, CTAs that deliver value aim to keep readers reading your content or encourage them to give you their email address in exchange for what you are looking for.
Businesses can take place both online and offline these days. Increasingly, however, the accomplishment of your industry will be well-defined by your capability to erode the line between online and offline and integrate online and offline customers into a single database.
If you keep offering value through your CTAs, you will be on the right path. Once you have figured out your customers’ needs, you need to tailor your CTAs accordingly, and you will be able to crack the deals.
Develop Engaging Content
If you want to stand out in a jam-packed market, develop distinguished content. One key is that it should be value-packed, enticing, and unique from others in your space.
By consistently putting out detailed guidelines on various marketing topics, they’ve driven gigantic and organic growth for their company.
So, how can you create unique content that resonates with the crowd? There are several strategies you can use:
- You should always strive to evoke an emotional response from the targeted customers.
- Create beneficial content that helps solve customers problems
- Utilize “thought-provoking” content that stimulates and uplifts
- Fix a narrative that your customers can relate to
- Include the element of surprise to attract the consumers
What do you want for your business? If you don’t know the resolution of your content, the consumer won’t have any idea either.
You need to know how you want someone to process after they consume a slice of your content.
For example, let’s say you’re endorsing a new product you have launched recently on your website. You decide to create content around it. This is an excellent idea in this day and age, but that alone won’t get people to buy the product.
Your content needs to capture the audience and highlight the features and benefits, and how it can benefit the consumers.
Locating call-to-action buttons on your website shouldn’t be a scavenger hunt. Instead, the buttons need to be placed evidently so that your site visitors can complete the anticipated action.
Increasing Current Market Share
Another one of the best low-cost internal growth strategies is to increase your company’s current market share. Most administrations do this by assessing their brand recognition, performing intensive market research, and growing their marketing efforts. To reach out to additional customers in your company’s current market share, it’s best to take the time to launch a thorough marketing strategy that uses both digital and traditional means of customer association. Usually, evolving outreach in a current market is one of the quickest strategies for organic growth.
Building A New Business
An additional in-house growth strategy is to create an entirely new business in juxtaposition with your existing business. This method is often one of the most cost-effective and time-demanding, but it offers enormous potential for overall inbound growth and sustained profitability.
Maybe you’ve hit a deadlock at your business. It’s maintaining a steady rate of returns annually but not developing at the desired pace. As the saying goes, a frog in a pond of water with a slowly rising temperature will die without getting to know what happened, but a frog placed into hot boiling water will see the difference in heat and try to get out immediately. The takeaway here is to stay innovative. This safeguards that the opposition isn’t slowly but surely surpassing you. Running a business requires constant innovation.
Cultivating Your Team
As they say, there is a great team standing behind every successful leader. Even though it’s essential to put customers first, the staff members can offer equally significant and worthwhile insights. Always plan quick sit-downs with your staff members every few days as you deem possible to get their feedback, which may give you some innovative idea that you had not thought of or reaffirm what you had thought of initially. Anyway, it’s a great exercise to follow for team building.
Aim To Score A New Demographic
Your existing product or service is already attending to several target markets. Assuming that you already have captured a great chunk of the prevailing demographic, you have some options to go about it: a) increase loyalty within the prevailing chunk of market share or magnify your share into another demographic. Once started, it’s advised to concentrate your energy on capturing one demographic.
When bifurcating to other customers, do your study thoroughly and ensure there is a market and opportunity to capture. This means accessing the market scope, ease of navigation, ways to crack, likeliness to try new products, etc. All these factors are important to take in.
Advantages of Organic Growth
Internal growth strategies provide companies with:
- Better control and coordination: companies can maintain control and ownership, whereas inorganic approaches lead to loss of control and ownership.
- Comparatively inexpensive: The resource is obtained from retained profits, a smaller amount of risk is involved of capital and is relatively lower than outward growth.
- The capability to uphold corporate culture: There will be no problems related to principles clashes that might get to your feet in acquisition environments.
- Lesser risk than external growth (e.g., takeovers)
- Can be financed through internal funds (e.g., retained profits)
- Builds on a business’ assets (e.g., brands, customers)
- Permits the business to grow at a more practical rate
- Cheaper. Businesses stereotypically depend on in-house backing for expansion – such as reserved earnings – instead of external funding such as bonds. So, the company does not need to pay consistent interest.
- Less uncertain. Management of the company that is already operating can have more control over the resources to grow, which disparities with acquirements, including another firm.
- Uphold control of the business. On the contrary, inorganic growth may call for additional funds, leading to modifications in proprietorship.
- The company’s values and work ethics are sustained. Both are organic abilities that describe why companies are fruitful. Inorganic growth may worsen such abilities because it calls for collaboration between two parties and their different values and cultures involving work.
Limitations of Organic Growth
Despite the rewards of organic growth, when equated to inorganic growth, there are still some limits associated with relying on this type of growth. They are listed here:
- Growth attained may be reliant on the development of the overall market
- Hard to build market share if the business is already a leader in the market
- Dawdling growth – shareholders may prefer more rapid growth
- Franchises can be hard to manage successfully
- Hierarchical arrangements may intensify the communication problems, and there may be a problem of slow decision-making.
- Overtrading: If a business grows outside its resources (took too many orders, unable to control costs/manage human resources), it surely is bound to fail.
- Restructure: When a firm grows, there is a need to streamline (requires time, effort, money), infrastructures, communications, and connections will need to be handled with more care, and there is a need for booster training or updating the set of skills for staff.
- Reducing down control and ownership: If a company grows from a partnership to a public limited company, the original owners may need to give up control and share decision-making with new co-owners. As a result, there may be extended decision-making and conflict of interest between shareholders.
- New employees may need to be hired if required. In addition, allocation of decision-making powers to executives (reducing control of original owners) might occur.
- Relaxed growth. The corporation only depends on organic resources that are dissimilar to a takeover that incorporates the capital, markets, and customer base of two companies. Occasionally, shareholders might favor inorganic growth because it proposes swift growth to kick its share price.
- Be the subject stage of the trade phase. Let us say the industry has entered an advanced stage. Given the case, it will be problematic for companies to intensify the corporate size any further. It usually leads to a downward phase at this business point, where the market share will also go down.
- Limited expansion. Companies find it challenging to build the market share if the business is already a market front-runner.
There’s nothing secretive about internal growth strategies. There’s a scientific approach that requires some coursework, discipline, and sticking to the memo sort of attitude. Exploration is key and the driver of a more effective strategy and more efficient and effective marketing. Nonetheless, you choose to grow your business organically or inorganically. Your definitive goal should be to do it in the most tactical way possible.
Articulate the best strategy based on your company’s current health, rivalry, industry trends, and financial capacity, then design a strong business case around that line of attack by projecting short- and long-term financial goals. Having this level of clarity for whichever strategy you commit to will give you a detailed draft to make the most informed decisions to support and sustain growth.
Organic growth is usually the preferred approach of businesses that they are comfortable with. By organically growing, you have the more controlled evolution and still have a substantial market share to win. Organic growth is slower than inorganic growth, but it will take your business to the next step you were longing to go to, as well as maintain the control you have always had.
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You might also enjoy these popular startup growth-related articles Types Of Business Growth Explained, 11 External Growth Strategies For Businesses and What Is Market Penetration Growth Strategy? on the same topic.
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