What is organic growth in business? Strategies for success

Organic growth – whether that’s an increase in efficiency, higher revenue or a growing team – is integral for innovation businesses looking to grow and scale.

We spoke to Innovate UK EDGE Innovation and Growth Specialist, Dr Nanette Bartram, who has a background in biotech and commercialisation, about the importance of organic growth for businesses, common challenges and strategies for success.

What is organic growth?

Organic growth comes from within a company. Whether it’s an increase in sales, market share or expansion, organic growth is fostered through the business’ own capabilities and resources.

Examples of organic growth could include;

• Developing new products or services
• Increasing output
• Expanding into new markets
• Opening new locations
• Growing sales
• Employing more staff
• Investing in production capability or technology
• Upselling to existing customers

The majority of businesses rely on internal processes and resources to grow and scale, so it’s important to consider organic growth strategies in your business plan.

This type of growth is also sometimes referred to as internal growth.

What is inorganic growth in business?

The difference between organic and inorganic growth is that inorganic (or external) growth refers to gains that come from outside the business, such as mergers and acquisitions. For example, teaming up with another business to share its product base and build on revenue.

The importance of organic business growth

For smaller innovation businesses especially, organic growth tends to drive revenue and is synonymous with building a successful business. Demonstrating organic growth provides validation for investors that there is value to the customer.

What are the advantages and disadvantages of organic growth?

Building your strategy around organic growth has many long term benefits, providing a solid revenue stream and market validation with reduced risk. Strong internal growth reduces reliance on external stakeholders such as investors, who may have their own ideas about your direction. This can for example provide a rich opportunity to fulfil your vision by building on internal strengths and developing a niche.

Building an innovation business organically isn’t always easy, and internal growth often means working harder and at a slower pace. If you’re looking for rapid expansion, you may need to consider a merger, acquisition or investment. Organic growth requires a business to source its own customer base and rely on its own tools and strategies for growth.

Relying on internal capabilities can also make you more vulnerable to market disruption. An experienced innovation and growth specialist can help you navigate market challenges and determine the strategic priorities for innovation-driven growth.

To sum up, organic growth offers slower, steadier advancement and allows businesses to retain autonomy over their activities and strategy.

How to measure organic growth

Some of the ways in which you can measure organic growth include looking at;

• Repeat sales percentage increase
• Revenue growth
• Employee growth
• Market share

Find more tips and advice on measuring business growth in our blog.

Challenges to internal growth

In her work as an innovation and growth specialist, Nanette helps her clients find solutions to organic growth barriers. Some of the challenges she sees regularly include;

Speed of growth

When clients come to Nanette looking to speed up growth, she recommends going back to its existing customer base and finding ways to adapt products and services to meet changing needs. Building on current relationships and finding ways to upsell products is one way to boost sales and accelerate growth.

Lack of organic growth strategy

Often, Nanette finds that her clients are in ‘do’ mode and would benefit from going back to basics. It’s always a good idea to take a step back and revisit the business strategy in order to identify areas to improve and opportunities for growth. This is where an Innovate UK EDGE specialist can lend their expert, impartial perspective.

Understanding the market

Having a good understanding of the market landscape, trends, consumers and competitors is key when it comes to successful organic growth. In order to align with your target market, you need to analyse your business’ position within that space.

If you’re struggling to achieve significant growth with an existing product or service, could it be applied to a different market?

Our specialists and targeted programmes can help you position your business appropriately in new markets, future value chains, systems and supply chains in both the private and public sectors.

Organic growth marketing

Not all smaller businesses have the internal skill sets for branding and marketing. However, this is an important aspect of successfully reaching your customers. From social media to paid ads – a marketing strategy needs to target the places your customers regularly inhabit.

Accessing support through Innovate UK EDGE gives you access to a wide range of connections in the innovation ecosystem, helping you to expand your reach and visibility.

Market disruption

Since the start of the current pandemic, market disruption due to Covid has become a common barrier to business growth.

However, some businesses have been able to adapt their innovations to meet current needs. Cloud computing start-up Cropdesk developed an app to connect farmers and seasonal workers during the UK lockdown. Help from Innovate UK EDGE allowed Cropdesk to secure extended impact funding and commercialise the new recruitment app.

Learn more about Coronavirus business support.

Organic growth strategies for innovation businesses

While the path to growth will differ for each business, there are steps you can take to ensure success;

• Understand your market and customer – conduct audits, research and collect customer feedback to establish who your customers are, their needs, pain points and current market trends in order to position yourself as the solution
• Develop your niche or USP – Once you have established where you fit, it’s time to develop your internal strengths and refine your innovation to target specific needs and gaps in the market
• Optimise your business strategy – From pricing to process, you will benefit from regularly revisiting your strategy to reallocate resources, boost productivity and ultimately increase revenue
• Explore new markets – As your growth journey progresses, you will likely need to break into new markets to expand and scale. This is where our connections, expertise and targeted global programmes can help
• Branding and marketing – Explore marketing strategies to maximise reach and visibility

Helping innovation businesses grow organically

Working with an Innovate UK EDGE specialist provides you with the opportunity to step back, reflect and work through your business strategy. With access to a diverse range of skill sets and expertise, our specialists can help you find solutions to unlock new markets, increase your visibility or exploit innovation.

Get in touch today for bespoke support and advice.