Organic growth

Business growth means increasing the size or scale of a business over time, for example by selling more, employing more staff or running more sites.

Internal (organic) growth

Internal growth, also called organic growth, happens when a business expands from within by increasing its own operations, rather than joining with another business. You can think of it as the business growing under its own steam.

For example, imagine a small chain of indoor climbing centres that uses its profits to open a third site, hire more instructors and buy extra equipment. It grows by doing more of what it already does, using its own resources and reputation instead of buying a rival.

Benefits and limits

Organic growth is often slower and steadier than external growth. That can be an advantage: the business can build on its existing strengths, brand and reputation, because customers already recognise and trust it and staff already understand how it works. Growing at a steady pace, in line with market growth, may also be lower risk than a sudden jump in size, because the business has time to train staff and adjust. Lower risk does not mean no risk, though — a new site can still fail.

However, organic growth can be limited by the size and growth rate of the market. In a small or shrinking market there may be few extra customers to win. It is also harder if the business already has a large market share, because most potential customers already buy from it. Finally, it usually needs sufficient profit to fund expansion, so a business earning little profit may only be able to grow slowly.