The basis for establishing and maintaining a vibrant and successful business is one crucial thing, which is a solid organic rate of growth. Without it, it doesn’t matter how unique your product is or how skilled your team members are. Your company and the profits you earn will be in danger.
What is an organic growth rate that is high? Many business owners aim to increase the size of their business by 10% every year. But, as per the Rule of 72 at that rate, your company will require 7.2 years for it to grow its size.
When I join an organization, I aim to reach and maintain a 30% growth. Why? Because, at this pace, the company will double in only 2.8 years. If it can maintain this growth rate, the company could triple within 4.2 years and quadruple within less than five years.
As you will observe, increasing the growth rate can make a huge change. If you’re struggling to raise your revenue, look at whether you’re setting your goals too low. If you’re looking at 10% growth, you should set your goals higher.
Suppose you think this is a challenge you don’t need to worry about. Whatever industry is yours or long you’ve been operating growing organically is possible by using some of the strategies I’ll discuss with you below.
The Two Levers Of Organic Growth
When I start an enterprise, my initial thought is always how I can bring about an increase in organic revenue. I’ve found that to maximize growth, it is necessary to deal with every factor and element that contributes to organic growth. The first factor to consider is Price.
Whatever you’re selling now, regardless of whether it’s a good or service What’s the question? If you can sell the same quantity at a higher cost, this higher cost is organic growth. Similarly, if you offer more significant amounts of products or services (even if you don’t increase the price), it’s organic growth.
Of course, as crucial as these two levers are, focusing only on Price or volume will not increase your growth to the level you want for it. This is why, in addition to taking care of the two levers above, it is essential to take on strategic pivots like providing a more comprehensive range of services and products.
Pivot By Tiering Your Products Or Services
Many businesses only provide one version of their product for one kind of client. Offering tiers of your services and products is a fantastic way to increase the appeal of your business to new types of customers, such as those willing to pay more for premium products and those who might struggle to pay for other products.
A company that takes advantage of this concept successfully is Mercedes-Benz. Top of the list is Mercedes-Benz’s Mercedes-Benz S-Class. If the S-Class isn’t affordable for one particular person, They have an E-Class alternative. For those who desire the prestige of owning a Mercedes but can’t pay for an E-Class, Mercedes offers the C-Class.
By placing its products on a tier by tiering them, Mercedes ensures it has something to offer as many potential customers as it can. My opinion is that it’s an excellent strategy to increase its client base. By simply changing the way they provide a variety of levels of service, Mercedes has effectively expanded its organic growth rate. You ought to think about doing something similar.
Improve Your Margins
Beyond taking care of the fundamental factors of volume and price, including tiered services and products improving margins, are crucial to boosting organic growth. When you offer the same quantity of development for the exact cost but have less to spend on this product, the difference in higher margins will result in organic growth.
It is vital to increase margins for getting high organic growth. It’s because when it comes to accelerating growth, the focus shouldn’t be solely on revenue. Instead, it would help if you focused on growing profits.
The benefit of improving profits is that it instantly enhances profitability even if there aren’t any other changes. This is why, if you’re trying to increase the organic growth of your business to a meaningful level (30 percent, as an example), lower costs for providing your goods or services are an essential element.
Think Differently About Organic Growth
To sustain and maintain an annual growth rate is a different way of thinking than what you have thought previously. In the beginning, you must be clear about what constitutes an effective organic growth rate.
To accomplish this goal, I instantly raise prices. I try to broaden my customers’ demographics and create new opportunities for volume, typically through tiering my products and services. Then, I consider ways to reduce expenses to increase my profit margins.
The trick is to concentrate on all of these actions and levers simultaneously. If you focus on just one of these components or levers at one time, you’ll be missing opportunities. Therefore, ensure that someone from your company has control of these critical areas. Let them work within the company to implement the necessary changes and set up measurement systems to verify that the actions you’re taking make an impact.
Monitoring changing, evaluating, and making adjustments; you’ll be able to create procedures that will ensure a constant concentration on the company’s growth. In addition, will you be able to achieve the rapid rate of growth that is important for building and maintaining a thriving, profitable and profitable business.