Having started a business, your next step might be to grow and expand your business.While you search for means to grow your business, it is important you understand why you want to grow your business.Business growth comes in various forms, therefore, understanding the reason for business growth will properly guide you into making the best decisions when it comes to business growth. Read more about Business GrowthBusiness Growth comes in various forms such as:
Organic Growth: This form of business growth involves making your current business model more productive while managing costs and controlling growth.
Acquisition: This has to do with buying or securing another business to yours.
This form of business growth offers a faster and risky way to grow your business.
Joint Venture: This means going into a Joint Venture with another Business or Organization.
This form of business growth offers a stable and mutually beneficial way to enter new markets and increase your customer base.
Licensing & Franchising: This involves granting licensees the permission to sell your product and in the end, you get cash for their sales.
There are many reasons why growing your business may be the right decision. The reasons that apply to your business will dictate the path your growth takes. Therefore, it’s extremely important to fully understand your motivations.REASONS FOR BUSINESS GROWTH
Respond to market demand
Growing your business, especially into other locations, and taking on extra staff occurs usually as a result of market demands.When the market demands more of your products and services in areas or locations where your business hasn’t reached yet, you might have to expand your business into that location in order to satisfy customer needs.However, this allows you to build on your current success, increase your market share, and capitalize on your growing brand equity to potentially become a market leader. Funding this type of expansion adequately requires careful planning to avoid unsustainable costs or overstretched commercial capacity.Sign up to the Connect Nigeria Daily Newsletter
Increase stability of business
This is another major reason for business growth, because when you start a business, the possibility of that business becoming stable is highly dependent on the level of business growth attained.On the other hand, as your business grows, people tend to believe that you are more likely to be around throughout the lives of their products to supply spare parts and honour guarantees if the need arises. If you grow your business, you are likely to sell more products and services to this market segment.
Increase Profits
With Business growth, you’re able to take advantage of economies of scale, get bulk discounts and better supplier credit terms, this means that major costs are reduced and profits increased. With the profit margin improvements that economies of scale can provide, many growing businesses see their profits increase alongside their operations. Generally, business growth is achieved from an increase in output which is goods produced and services provided, this simply means that if goods and services are sold and properly rendered, this will consequently increase sales revenue.
Increase in market share
This is another important reason for business growth, because major increase in market share results from business growth. In addition, when market shares increase, the business organization tends to gain a higher profile and gain more market power. This means that the business will now be able to increase sales revenue and gain more profits at the same time as costs remain unchanged. In addition, the business also will have greater bargaining power with suppliers.
Survival of Business
It is the desire of every business owner for his business to survive and remain relevant in the market.However, businesses must grow by applying the necessary business growth strategies, because if your business doesn’t grow and stand the test of time, then such business is not far from crumbling.Every business owner wants to apply the right business growth strategies to his business, nevertheless, it is important you understand the reason for business growth. This will properly guide you to making the right choices and applying the right strategies to your business.Featured image: Arth TechnologyGot something you want to read about on our platform? Contact us: editor@connectnigeria.com
