New products

Organic growth means expanding from within, and one way to do this is by developing new products. As well as selling more of its existing products, the business creates something new to sell alongside them, so its sales can rise without joining with another business.

Where new products come from

Innovation means coming up with new ideas or better ways of doing things, and research and development (R&D) is the work of investigating those ideas and turning them into products that can be made and sold. For example, a firm making garden furniture might spend a year testing designs for an outdoor heater that runs on a rechargeable battery, then launch it once it is safe and reliable.

Why it can grow a business

A new product can attract customers who were not interested in what the business sold before, and it can increase sales because existing customers buy more. It can also help the business enter a new market segment: a smaller group of customers within a market who share similar needs that other customers do not have. The garden furniture maker could reach people who want to sit outside in autumn, rather than only those buying summer furniture.

The drawbacks

Development can be expensive and time-consuming: design, testing, machinery and marketing all cost money and take months. There is also no guarantee that customers will buy the product, so the money spent may never be earned back.