Organic - A Healthy Growth Option

If you are at a happy level with the business but strive to take it further to increase your turnover and make more profit then you need to look at your growth options. These options could be Organic Growth, Mergers and Acquisitions or Franchise. When deciding it’s important to understand the implications of each option but ultimately you need to evaluate your personal objectives.

Organic growth comes from a company’s existing business so allows you to grow by doing more of what you are already good at. It can be achieved by selling your existing product range to new customers, new products to existing customers, new geographical area, different distribution channel or any combination of the above using your original business model.

Growing naturally using your tried and tested business model is much safer than rapid growth through mergers and acquisitions. Achieved correctly, this type of growth can be easier on your finances. Reinvesting profit back into the business rather than outside investment also avoids pressures from shareholders. You also need to be aware of the possible disadvantages of organic growth. It can take longer than other growth methods so if you wish to expand rapidly it may not be for you. Some business owners also flourish having outside investment, pressure and guidance.  These limitations can be avoided using CMC. We can help you achieve your goals, avoid these pitfalls with advice and guidance at every stage.  

Strategy for Growing Organically

Once you have decided on your ultimate objectives and that organic growth is right for you and your company then you can move on to the next stage - building a strategy for growth.

The right strategy begins with an assessment of the business’s current strengths and weaknesses, and ability to deliver stability and long-term profits. CMC believes there are five key areas for you to examine:

• Strategy – New or existing customers new or existing products, distribution channels, pricing structure, competitor analysis

If you wish to sell your existing product range to new customers or extend to a new geographical area you may need to increase marketing activity or expand your sales force.

Growing organically using additional distribution channels such as internal or a wholesaler you need to ensure it generates new sales rather than taking sales from existing channels.

Do you need to fine tune your business model? How realistic is your plan? Does it identify how you can make the most of the market position you've established and provide a clear road map for where to take your business next? Is the business model workable in the future or is it threatened? Are you playing to your strengths and working round your weaknesses?

• Finances – Accounts, asset management, raising finance.

How healthy are they, and how realistic are your numbers for the future? Are your margins sustainable? What level of risk are you taking? How are you measuring the critical performance indicators?

Are you knowledgeable about the different forms of finance? Do you have the appropriate contacts and advisors?

• Sales & Marketing – Sales pipeline, PR, campaigns, branding, web sites, literature

You will need to launch a marketing campaign or increase your sales activity. Are your marketing plans well-grounded and your sales process adequate to deliver the numbers you project? Is your Sales and Marketing developing against your competitors or are you being left behind? Do you need a new website to increase your online presence? Are you embracing social media to get closer to your customers?

• People – HR, recruitment, people development

You will need to scale the business to keep up with the new demand. Questions to think about are: Do you have the right people in place including managers and directors? Do you need to increase workforce including marketing team? Does the existing team have the right skills, training and development? Do you need to restructure the sales team? Have you the right company culture to move with the change?

• Processes - Informal processes or highly engineered infrastructure

Are they robust enough to support the increase in activity that growth will mean? Is your business scalable and still efficient as it grows? Do you have structured monthly management meetings and are they recorded efficiently? Do you need to put measurement processes in place to gauge performance including financial, operational and behavioural metrics?

The ‘growth’ phase of a company’s lifecycle is a very different phase from the ‘start-up’ phase you have been used to managing. Whilst organic growth is a natural method of expanding your business it doesn’t happen all by itself. It demands planning, different skills, and the right people and processes to be put in place.

At CMC we will provide an objective outside view to help you decide if and when to kick off a new phase of growth for your business. When we have gained a thorough understanding of your aims, we will work with you to take you through the decisions you need to make, and create a thorough and effective action plan to achieve the results you want. We will 'hand hold' you through each decision, helping you to avoid the pitfalls and ensuring profitable growth.