4 Ways to Grow Your Business Internally
Growing your business is a sign of success, right? After all, it means all of that hard work you’ve put in is ready to pay off with increases across the board.
Business growth, though, isn’t as simple as it may seem. Growth simply means that increase marker, not necessarily a profit increase.
Instead, it could mean a larger customer base, better market coverage, or even additional staff. Business growth can happen in many different spaces, and understanding where those spaces occur and how your business might benefit from them is key.
Internal Growth vs. External Growth
Internal growth is the kind of growth that takes place inside your organization with the resources you already have.
These growth strategies tend to focus on new product development, better efficiency rates, stronger staff productivity, and marketing.
External growth happens when you want to build outside your company, maybe through acquisition or another kind of partnership.
In an internal growth model, you’re relying on what you have right now. In an external growth model, you’re relying on outside resources to create the growth you want to see.
The Benefits of Internal Growth of a Business
While external growth certainly has a number of advantages, internal growth might be the ideal choice for your company.
It can help to improve your knowledge of the market and the technology surrounding your product. More than that, though, it helps to disperse your investment in your company over time, so you may not have the upfront costs you would expect to have should you choose an external growth strategy.
Additionally, you don’t have to worry about timing quite as much with internal growth. As you’re ready to expand and your feasibility studies say it’s time, you can get started.
If you were relying on external growth, however, you might be dependent on whether acquisition targets were available or alliance partners were willing to move forward with you. Internal growth also means having the advantage of continuing your culture.
When two companies merge or a partner is brought in, you may find a culture clash among employees on your hands, and that can affect other areas of your company.
The single most important benefit of internal growth, though, is strategic independence. When you engage in external growth, you may need to make compromises or concessions.
That could constrain your company or even limit your choices going forward.
How to Grow Your Business Internally
If you think that growing your business internally is the right way forward, you may wonder exactly how to make it happen. There are four basic internal growth strategy options.
- Market penetration is one internal growth strategy, and you might already be familiar with this concept. The idea here is that you sell more of your current products in markets where you already exist. To make it happen, you might do things like beef up your distribution, invest in your marketing a bit more, or even consider making bulk offers.
- Market development is a common internal growth strategy too. Here, you sell more of your company’s current product line to markets in which you’ve never competed before. This kind of growth strategy aims to reach out to new target audiences or even change your geographics when it comes to marketing. Perhaps you expand to the next major market area or even internationally.
- Product development might be the most familiar type of internal expansion. Here, you’re developing new products to sell to the markets where you already play a role. Maybe you create a product that’s quite similar to the one you already sell with a few modifications. Perhaps you launch a companion product that will work nicely with yours. When most people think about growth, they think about new products, which is a great way to build your company.
- Diversification is another way you can grow your company internally. In this type of growth, you’ll move into new markets with your new products. They don’t have to be related to what you’re selling, but they certainly can be. For example, suppose you decide to expand your company to the next major market area with a new widget you’ve never sold before. In that case, you’re using a diversification strategy to help your company grow.
While each of these options may seem pretty basic, all of them can be quite complex as you look at how to set your company up for success.
If you’re looking for the proper internal growth strategy but not quite sure where to turn, we can help. At AMB Performance Group, we can help you find a growth strategy that works for your company and ensure you have the knowledge you need to grow sustainably.
Contact us today if you are a business owner looking for group coaching.