Growth is often good for a business. An expanding company will usually be increasing sales and strengthening its position in the market. However, growth isn’t a strictly defined concept. In this article, we’ll explore what business growth is as well as why it is important for small businesses.
What is business growth?
A growing business is one that is expanding in one or more ways. There is no single metric used to measure growth. Instead, several data points can be highlighted to show a company is growing. These include:
- Company value
- Number of employees
- Number of customers
Companies can grow in some of these metrics but not in others. For example, revenue can grow without an increase in customers if the gains are caused by existing clients buying more. It’s even possible for one metric to increase while another decreases; if sales growth is brought about by a reduction in product price, a business’s overall revenue could still go down.
This means defining growth can be difficult. Those looking to grow their business should look at their business goals to establish the growth metrics they find important.
For some ambitious start-ups, this could mean doing everything they can to increase the total number of customers, even if they make a huge loss in early phases of growth. However, other businesses will benefit from slowly increasing revenue and sales to ensure money is coming in to help cover costs.
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