Growth Company Definition, Characteristics, Strategies, & Risks

Owners must be able to delegate tasks as the company becomes increasingly complex and as demands scale with the business. For example, a chef and restaurant owner may get an opportunity to distribute their special sauce in grocery stores nationwide. The initial product offering—a homemade sauce from a passionate chef—is what built the success. A mass-produced version of the sauce manufactured in a factory likely won’t deliver the same product to consumers.

Acquisitions are sometimes lumped together with mergers, but the two are actually slightly different concepts. Another 10%–20% is likely to go toward differentiation — developing new offerings before the competition does. These are things you’re not sure how to deliver, but you know the market wants them, making it worth trying to figure out. Efforts like these carry greater risks but promise greater rewards if you’re first to market.

After you’ve chosen what you want to grow, you’ll need to justify why you want to grow in this area (and if growth is even possible).

In order for your business to grow, you need to have a very nuanced and thorough understanding of your brand, its identity, and its position in the market. Take time — and even trial and error — discover which meets the needs of your specific business goals at any given time. During the partnership, Lyft offered riders free access to “Taco Mode,” during which passengers could make a pit stop at Taco Bell on the way to their destination. This drove sales up for Taco Bell, and drew hungry customers away from competitor Uber and into the backseat of a Lyft.

The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, personal finance education, top-rated podcasts, and non-profit The Motley Fool Foundation. For growth companies, the ability to acquire and retain customers is vital for sustaining growth. Improving margins can indicate scaling efficiency and the potential for sustainable growth, important factors for long-term investment considerations. While growth companies may prioritize expansion over immediate profitability, assessing their profitability margins is crucial for understanding their financial health and operational efficiency. The ability of a growth company to maintain its market position and continue its trajectory in the face of competition is a critical consideration for investors. These businesses often operate in highly competitive markets or are in the process of disrupting established industries, which can prompt aggressive responses from existing players.

Revenue Growth Rate

There are a number of different specific growth strategies for your team to consider that may meet your growth needs. The growth strategy you choose will ultimately depend on your organization’s budget, opportunities, competition, and goals. Some business growth strategies are focused on revenue, while others prioritize the size of the customer base. A business growth strategy is an outline of the methods, tactics, and specific actions an organization will use to meet business goals.

This could mean hosting or sponsoring events, attending conferences relevant to your space, hiring brand ambassadors, or any other way to directly and strategically reach out to your target demographic in person. Say your company developed an app for transitioning playlists between music streaming apps. Assume you have a few competitors who all generate revenue through ads diversecityllc.com and paid subscriptions — both of which frustrate users.

If you’re currently selling your offerings at a brick-and-mortar store, you might want to explore the idea of e-commerce. This way you can gain customers online, even if they live in another state. You can also open new brick-and-mortar locations or tweak your business so that it accommodates global customers. By strategically partnering with another business, you can access a broader customer base. Ideally, you’d partner with an organization with products or services that complement your own and don’t directly compete with you.

How AI Can Change the Way Your Company Gets Work Done

Unsurprisingly, companies in this phase are volatile, and many companies don’t make it out of this phase as ownership fails to receive a commensurate return on their time, energy, and capital investment. On the other hand, the leader who aspires to growth but underinvests in initiatives or removes funding from growth is one whose actions do not match their aspirations. C-suite leaders who choose growth are much less likely to yield when challenges arise, finding opportunity in headwinds and reasons to innovate where others retreat to conventional defensive playbooks.

Similar to organic growth, this strategy relies on companies using their own internal resources. Internal growth strategy is all about using existing resources in the most purposeful way possible. This is the 39th year for our annual Fastest-Growing Companies list, which ranks companies based on growth in revenue, profits, and stock returns; this year’s edition tracks those metrics over the three years through June 2024.