Organic vs. inorganic growth: what’s the best strategy for your business?
Introduction
As a business, growth is essential for your success. Growth gives you financial security, helps you remain relevant to your target audience, and makes your company more attractive when the time comes to sell it.
But what is the best way to achieve it? In this article, you’ll discover what the difference is between organic and inorganic growth, what their advantages are, and how you decide what to focus on in your business.
What’s the difference between organic and inorganic growth?
Organic growth means expanding your business by developing new products, expanding your customer base, entering new markets, and increasing your sales. The speed of your growth is determined by your resources. Inorganic growth, on the other hand, involves expanding your business substantially in one go through mergers and acquisitions.
What are the advantages of organic and inorganic growth?
As it relies heavily on your own resources - time, money, skilled employees and partners… - organic growth is relatively predictable and sustainable in the long term. You also retain control over the pace and direction of your growth. Another important advantage of organic growth is that it is a low-risk approach, as it doesn’t require large-scale investments or acquisitions that may bring unforeseen complications.
Inorganic growth can help your company grow at a fast rate by expanding your customer base, product lines, and market presence. You also get access to new resources and capabilities - technology, talent, capital… - that can further accelerate your growth. Finally, inorganic growth helps you diversify your operations and reduce your independence on a single product or market.
Which strategy suits your business best?
Whether your company should focus on organic vs. inorganic growth depends on your specific situation:
- What resources do you have available in your company and what strategic partners can help you fill in the gaps?
- How competitive is your market? How fast do you want/need to stay ahead of your competitors?
- What are your long-term goals? Where do you want to go and why?
- …
These and other questions can help you decide what path to take, although it is important to note that organic vs. inorganic growth doesn’t have to be an either/or question. E.g. if you are thinking about selling your company in just a few years, inorganic growth might be the best way to go. In most other cases though, a combination of both will give you the best possible results.
Where do you want to go?
Do you find it difficult to decide on the best approach to growth for your business? Or do you lack the right skills and expertise to put the wheels in motion? Equals Three is happy to help you through strategy, design, marketing and financial services. Request your growth scan today and get tailored advice on how you can grow your company!