When to Plan for Growth

Image via Flickr by reynermedia

Trends in the business world are pointing to an increase in capital investment in new growth this coming fiscal year. Both organic and inorganic growth are likely targets as businesses seek new avenues for growth. This marks a shift from profit-driven activity to a more long-term strategy, and reflects positively on the increasing stability of the U.S. market. Knowing how to take advantage of this and plan for your company’s growth will be instrumental in keeping up with the trends.Organic Growth

Organic growth or growth within the company is the most desirable and least disruptive to the current business model. Putting your company’s finances to use in increasing capacity, increasing output, and increasing profitability by driving down costs are among the chief ways to grow your company organically. These methods result in higher profits with a minimum amount of disruption in the form of policy changes or organizational changes.

Expansion is another form of organic growth that is slightly more disruptive in nature, often requiring new policies and organizational changes. Costs involved include hiring new staff to oversee new operations, as well as the costs involved in expansion and training new employees.

Planning for increase in capacity and expansion involves the setting aside of proper funding for these allocations, and requires the proper amount of analysis and research to determine feasibility, viability, and projected profits.

Inorganic Growth

Growth through mergers and acquisitions is definitely the most disruptive to the current business model – but it can provide some of the most immediate benefits when done well. The combination of greatly increasing capacity to sometimes double or more, while at the same time removing a rival or competitor from the marketplace, is very attractive. Proper execution of a merger or acquisition requires still more analysis and research, planning, and attention to detail. Preparing for inorganic growth requires meticulous financial work, making sure all the required budgets and projections are correct in order to ensure that the post-merger organization is able to thrive and continue to succeed.

Are you planning for growth? What financial plans do you have in place to help grow your company?

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