Organic growth vs. inorganic growth
Organic growth is a type of growth that just happens as businesses mature and expand. This type of growth results from products growing in popularity and management working out more efficient ways to produce goods or provide services. Organic growth happens within the existing framework of a company, without any outside funding. It's accomplished simply through improving business processes and due to the effect of time.
Inorganic growth for businesses, on the other hand, happens due to mergers and acquisitions or by borrowing money for activities like opening new locations or new subsidiaries to expand the business. You can tell the difference because inorganic growth involves an increase in assets, operations, liabilities, and liquidity, all of which will appear on the balance sheets.
Over time, if the expansion or merger is successful, that growth becomes organic growth since it's resulting from a fully integrated part of the business.
Organic growth strategies
Specific organic growth strategies depend heavily on what the business is doing and offering to the public. In general, however, you can expect organic growth to occur from changes in operations, like:
- Changing marketing or branding strategies.
- Reallocating company efforts and funds into higher-profit areas.
- Developing new products or services that meet untapped customer needs.
- Reaching customers in new places, such as online or at trade shows.
Of course, none of this is possible without tracking key metrics that can act as performance indicators and using those metrics to develop actionable steps that grow the company's business activities. The key to organic growth is generally delivering more products or services to more customers, who are so delighted that they become brand ambassadors, helping the company to grow even more.
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