Everyone wants to grow their business. As you grow your firm, you need to have a higher growth rate than your competition.
You’ll discover the only way to grow faster than the competition. Also you will understand how to grow your business internally, and externally.
It’s normal to hear statements like “The Internet industry will grow by 8.75% margin. But the future of these statistics will depend on what Internet businesses are doing today.
Moving from small to medium enterprise isn’t difficult. It can be as simple as reinvesting the resources you already have.
But how do you know that your business has grown? Before diving headlong into that, let’s first look at different aspects of business growth.
Getting Smart With Internal Growth
You are already an entrepreneur. And an entrepreneur needs to enjoy profits alone. You can’t do that if you involve other businesses. And that’s internal business growth. To explain further, you grow without involving other businesses.
The benefits of growing internally is that you will be responsible for your decisions. If you manage to grow by yourself, you will gain more confidence to keep investing in your ideas. Even if few people believe in it. So before you begin anything external, start by growing internally.
The External Growth Of A Small Business
Involving other business is also a good way to grow your firm. Through interaction with C..E.Os of other businesses, you have a chance to benefit from larger economies. You can use the different types of business cards to give contacts to potential prospects. External growth will also help you avoid a cut-throat competition. And you will know how to benefit from a tough competition.
Which one should you start with? As can be seen, both internal and external growth of a business are related. If possible, do both. Here are 4 ways to grow your small business.
- Internal Growth: Plough Back Profits: In reality, most businesses that make profit should have a profit-sharing ratio. For example, 30% of the revenues could go to marketing, 20% to employees, 25% in improving the product, and 25% in savings.
Reinvesting all profits into a business is a sure way to expand your business. You can consult smart minds in your niche. In addition, you can get a better team that will increase sales.
- Internal Growth: Sell More To Increase Market Share: The more you sell, the more you grow. Later, you’ll see how market share, is a popular metric used to distinguish between small and medium enterprises.
To sell more, you need to close more deals. You have to focus on improving your products and services. As a result, you will get referrals from the word of mouth. Also, you can sell more by improving the quality of advertisements. Focus on Ads that convert. If a video Ad performed better in recently, replicate the same method. Study your market through market research. And know how to address their concerns while selling.
- External Growth Through Mergers: As a business person, you already have an understanding of your environment. You know companies that are in the same level of production as yours. You can merge together. Also known as Horizontal Mergers. Whereas in vertical mergers, you partner with a business that’s on a different scale of production.
While doing vertical mergers, make sure that there is something you can benefit from the other business. In some cases, the waste resources of one business can be the raw materials of another business. In that case, there is a higher success rate in the merger.
- External Growth: Diversify By Acquiring Shares: Can you guess one way businesses use to spread risks? Diversification. Any businesses can spread its risks. With a lot of competition, market crashes, failures, uncertainty about the future, there is need for diversification. You only need to acquire shares of other businesses, in a different industry.
After implementing all these, it may still be difficult to notice whether your business has grown. If you experience the following characteristics, know that your business has grown.
How To Know That Your Business Has Grown From Small To Medium Enterprise
- An increase in the number of gross sales volume.
- An increase in the number of employees.
- A larger capital that can finance the business for longer time when it’s running at a loss.
- Improved level of technology. Businesses can get specialised equipments than their competitors.
- Your business covers a larger market.
- An increase in the amount of profit made.
- Covering of a larger floor space.
As a business owner, you are under obligation to track and follow on all these metrics. If you see positive changes, that’s growth.
With leverage, it’s possible to use other people’s resources to grow. The internet can be a good tool for expanding your business. You can get knowledge to increase your team’s competency. You can find cheaper costs of producing, which will increase profits.
In addition, it’s possible to use other people’s time, experience, and business models that took them years to make. All in all, you need to be smart in all your strategies and make sure that for every dollar spent, there is a way you can return it more.