Nature of business growth, planning for growth and reasons for growth and managing growth

Business Growth

Commercial growth is the expansion of a particular aspect of a business enterprise's success. Revenue growth and cost-cutting/ overhead-reduction initiatives are two common ways that businesses expand. A company is regarded as growing when it starts to sell more goods or generate more revenue from services because it is doing so. A business also expands gradually when it can reduce costs or eliminate them altogether and increase profitability. Businesses that are truly successful succeed in both areas, and success in one area frequently leads to success in the other. When a company sells more products, it occasionally receives a better price for those products, which lowers expense. Businesses convey savings to customers when overhead costs are lowered.

Nature of Business Growth

The natures of business growth are as follows:

• The most crucial element for increasing a company's profitability is growth. Under favourable circumstances, business growth is a typical and natural process of development and adaptation.
• Business growth is not something that can be accomplished quickly, or overnight. It proceeds steadily. To expand and thrive, the company must adapt to too many different situations.
• An organic objective or target is business growth. Once a business has survived, it then strives to expand. Growth ensures the company's ongoing existence in the marketplace.
• Company expansion refers to an increase in the volume of business operations, including those related to production, profit, and sales, among others. It inspires trust in the minds of customers' shareholders, employees, investors, etc.
• Growth in a business does not occur automatically. A plan that outlines the subsequent steps to be done is necessary for the expansion of any business. The strategy must also be flexible and adapt to changes in the environment.
• Expansion and diversification, mergers, and amalgamations are all ways to build a business.
• A growing firm is advantageous to society as a whole since it creates employment opportunities for workers, offers customers high-quality products, enjoys success and prestige in the marketplace, and pays dividends to shareholders.
• Growth enables the company to seize market opportunities, handle competition with ease, and make the most use of all its resources. Growth also makes it easier to innovate and improves the status and image of the company.
• Growth is broad and omnipresent. It does not only apply to one certain form of business. It occurs in all different kinds of commercial entities, including cooperative societies, joint stock companies, partnership firms, sole proprietorships, etc.

Planning for Growth

The most important aspect of every business's success is planning. Every successful company regularly evaluates its business plan to make sure it still satisfies its requirements. Regularly assessing existing performance to determine the most likely growth strategies and plans is smart and realistic. Often, people make the mistake of thinking that business plans are solely for new businesses. But without a defined business strategy, management of the company may find itself readily affected and responding to circumstances rather than managing pro-actively. Therefore, if the business plan hasn't been changed from the beginning, it should be after some time, taking into account a documented business strategy for its development. Periodic planning is a strategy that is required to stay up with the ever-changing business environment and can aid in attaining growth and profitability.

When creating a company plan for expansion, keep these five factors in mind:

• Define goals and priorities: SMART goals should be selected from the list of long-term objectives; these are goals that are specific, measurable, achievable, realistic, and timely. These objectives will serve as the proprietor's roadmap while he/she develops his/her business strategy for expansion and will help him/her concentrate on accomplishing what is necessary to meet these goals.
• Set up a timeline: Establishing a calendar or schedule with checkpoints will help you track your progress toward your goals. The owner should include information in the schedule, such as clients they aim to attract and potential new hires. describing in more detail how these actions will help the growth objectives be met.
• Plan for cash: Growth tactics like regional or product expansion can at first result in a negative cash flow. Because acquiring growth can initially be expensive, growing revenues do not always equate to growing profitability. The owners' ability to support the expansion of their business without jeopardizing themselves will be determined in large part by the financial plan, particularly the cash flow estimates.
• Profile competitors: Since the company's founding, have any new rivals entered the market? How have the market's current competitors evolved in reaction to the entry of new businesses (competitors)? Owners must constantly be conscious of how the competition may effect their objectives. Adjustments are made to the following components as part of strategies to combat competitive forces:
  • Price
  • Speed
  • Quality
  • Niche markets

Monitoring development and assessing outcomes: Establish business and industry benchmarks against which an owner can evaluate his or her performance in order to keep track of the advancement. He or she needs to compare "Where Are We Today?" with "Where Do We Want to Be?" in a gap analysis.

Reasons for Growth

• Survival: If a company stays tiny for an extended length of time in particular industries, it may not survive. Being small could indicate that expenses are too high. These businesses might not be able to compete with more established rivals. Small businesses could also be acquired by a bigger corporation.
• Gain economies of scale: A company will benefit from economies of scale as it expands in size. This implies that unit costs will decrease, and revenues will increase. The cost advantage that results from a firm's increasing product output is known as economies of scale. Because of the inverse relationship between per-unit fixed costs and quantity produced, economies of scale arise; that is, the more of a good is produced, the lower the per-unit fixed cost will be because these costs must be distributed over a greater number of goods.
• Increase future profits: A company will grow and sell more products in the future in the hopes of increasing profits.
• Increase market share: Larger corporations might be able to control the market. For instance, they might be able to increase prices or control a certain portion of the market. Some employees might appreciate the authority and status that come with a sizable market share. It may be argued, for instance, that Richard Branson appreciates the publicity that comes with running a significant business like Virgin.
• Reduce risk: The risk can be reduced by diversification. By diversifying into new markets and products, the company can continue to operate even if one of the new ventures is a failure. For instance, when British Train was privatized, Stagecoach, a UK coach company, expanded into the provision of rail services.

Managing Growth

The path to success contains a humorous little turn of events. The ability of the company to retain its success might frequently surpass its profitability. Rapid advancement can result in failure. Therefore, the company's growth should be appropriately handled, some of which are listed below:

• Create a Scalable Management Model: The entrepreneur must create scalable management and quality control processes as the business expands. Early on in a project, management and quality control are quite simple.
• Define a Quality Control System: The owner must ensure that the quality of the products or services is maintained during the developing phase of the business despite its expanding size. As a result, he or she must decide what should be included in a quality control system before assigning someone inside the management model the duty of upholding that quality.
• Time and life savers (eventually): Making sure the business has the resources to deliver as demand rises and the time to identify potential issues before they threaten the company's viability are the keys to managing expansion effectively.
• To manage the increase, various additional components are needed. Having a medium-term goal and sticking to it, maintaining customer satisfaction, assembling the correct team, taking financial considerations, etc.

Reference:

Baumol, WJ. (2004). Entrepreneurial enterprises, large established firms and other components of the free–market growth machine. Small Business Economics

Muthaih, K, & Venkatesh, S. (2012). A study on the barriers affecting the growth of small and medium enterprises in India. International Journal of Research in Computer Application Management.

Retrieved from smallbusinessbc: http://smallbusinessbc.ca/article/your-business-plan-strategically-planning-growth/

Teegardin, K. (2008). https://www.reference.com. Retrieved from reference.com: https://www.reference.com/business-finance/definition-business-growth-8efcb9a51c713e32#

UK, B. L. (2009). http://www.infoentrepreneurs.org/. Retrieved from infoentrepreneurs: http://www.infoentrepreneurs.org/en/guides/prepare-a-business-plan-for-growth/ Business Link UK