What is Business Growth and Why It Is Important | Act! CRM

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:

• Revenue
• Sales
• Company value
• Profits
• 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.

Why is business growth important for a small business?

It’s important that all companies experience growth. However, the type of growth required will depend on the stage of growth the business is in.

Start-ups usually need to grow in order to cement their position in the market and quickly get to a size that is large enough to bring in enough revenue to cover costs and begin to make a profit.

Mature companies don’t need to grow quite as fast. However, they may still want to ensure their metrics are going in the correct direction. An increase in profitability, brought about by sales process efficiencies, could help a stable business build liquidity to protect against future risk; even if revenue and sales stays the same.