4 arguments for organic growth in your business

By Kathy-Ann Fletcher

The competitive nature of business today and the need to acquire loads of revenue quickly can cause companies to use such techniques as mergers and acquisitions to grow their operations rapidly. However, I have observed several of these companies fold because they expanded at a quicker rate than their demand or capabilities could handle.

This leads me to believe that growing at such a quick pace may not be the best thing for all. It may be great for some to grow at a more organic rate. Now what do I mean when I say organic growth? I mean the use of a company’s own resources to expand its operations and business. This may be to expand production due to growing demand or it may be expansion in the attempt to build a customer base. While some companies would buy or sell the business to another enterprise or merge their operations with that of another organisation, I present the following arguments for organic growth.

1.       It is a testament to success – Positive organic growth is a good sign that a company is achieving its goals. Other than that it can also serve as an evaluation of how well a company is utilising its resources to achieve sales and revenue targets and new targets may be set due to these reviews.

2.       Freedom – if you allow your company to grow organically, you are less restricted in the direction you choose to take your company. Combining with another company means that you may have to compromise on the strategic outlook of your business, whether this is in objectives or tactics to achieve these goals.

3.       In gaining investment, funny enough, the investors will often focus more on what you have accomplished organically to determine the potential future of company and whether or not they will invest in the business.

4.       Debt – Mergers and acquisitions can leave you saddled in unnecessary and sometimes unmanageable debt. This debt can cancel out the value of the new acquisition or entity.

While it may take longer to achieve certain goals it is best to grow as much as you can organically before taking on huge growth fuelled by mergers, acquisitions or even huge investments within the company. These moves can cause even the most established companies to be turned upside down in terms of change of corporate culture and restructure of the finances. Therefore, it is best to grow organically until you are sure that you are willing to adjust as is necessary and that your company is able to react to the changes it will be exposed to due to forced expansion.