There’s no one-size-fits-all answer for the best way to grow your business. Your lifecycle stage, industry, and current market conditions can all influence the type of growth that works best for you.

When it comes to organic versus inorganic growth, balancing long-term and short-term goals is a key component. An inorganic growth plan built around mergers and acquisitions (M&A) can fuel a rapid increase in profits and capabilities. But studies have shown that internally focused organic growth can generate more value over time. McKinsey & Company followed 550 companies over 15 years and found that those focusing on organic growth achieved higher shareholder returns than those relying mainly on acquisitions.1

“Organic growth is critical to business success,” says Scott Cathcart, head of Corporate Finance at Truist. “It’s often slow and steady growth compared to the quick returns that an acquisition may provide. But when you grow organically, you’re building a foundation that supports you throughout your business lifecycle.”

Here are some key things to consider as you embark on an organic growth journey.

Weighing the advantages of organic growth

The McKinsey study found that one reason organic growth provided greater value generation is that it requires less upfront investment than inorganic strategies like acquisitions.1

“Organic growth relies on optimizing your internal processes and resources to generate increased revenue and sales,” says Cathcart. “It typically can be funded through working capital rather than the large credit facility that an acquisition might require.”

An organic growth strategy also sidesteps the potential disruption of integrating two companies after an M&A transaction. Without the influence of external voices, you can maintain control over the company’s direction and ensure that operations remain aligned with your vision. That could be important later in the business lifecycle if you decide to transition away from the business or want to enlist investors to support more growth.

“Successful organic growth can also make your company more attractive to investors,” says Cathcart. “Demonstrating that you can increase production, sales, and revenue without relying on external transactions goes a long way in boosting investor confidence.”

Organic growth is often slow and steady compared to the quick returns of an acquisition. But you’re building a foundation that supports you throughout the business lifecycle.
-Scott Cathcart, Head of Corporate Finance, Truist

5 key strategies for achieving organic growth

Your Truist relationship manager can offer insights and financial guidance as you consider organic growth strategies like these.

1. Get to know your customers even better.

Two paths to organic business growth are adding new customers and selling more to the customers you already have. Increasing your focus on research into consumer preferences and behaviors can help you target your products and services to customer demands. 

Once you have new customers on board, it’s important to build loyalty quickly. Studies by business consulting firm Prophet show that customers who make a second purchase within 90 days of the first bring more than twice the lifetime value of other customers.2

2. Reallocate funds to high-growth activities.

Identifying the parts of your business that are already growing and dedicating funds to fuel that growth can have a profound effect. The key is finding efficiencies that free up capital.

“Your Truist relationship manager can help by analyzing your financials and suggesting strategies for improving cash flow,” says Cathcart. “You might also be able to trim administrative costs, renegotiate contracts, or divest poor-performing parts of the business.”

Data is another powerful tool for this strategy. Accurate analytics can help you pinpoint where growth is happening in your portfolio and reallocate funds successfully. In fact, McKinsey & Company says 81% of high-growth companies have analytics and data capabilities that they use regularly.3

3. Invest in R&D for product innovation.

Enhancing your current products with refreshed features or creating additional products and services that appeal to a wider audience can help you grow your customer base or expand share of wallet with existing clients. Before you start brainstorming, do some deep research into your current customers’ needs and wants. McKinsey & Company shares the example of beauty care business Alberto-Culver, which created an online community focused on hair care and beauty regimens to gain real-life insights. What they found led them to create TRESemmé Fresh Start Dry Shampoo—which quickly became a top seller for the company.3

4. Find your niche.

Increasing your market share doesn’t always mean broadening your offerings. If R&D investment isn’t a good option for your business, consider narrowing your focus to a niche where your company excels. Start by defining your target audience. Niche markets are often based on shared characteristics of customers, such as interests and hobbies, location, or values. For example, if you produce sustainable alternatives to certain products, you can cater to eco-conscious consumers. Creating a niche focus can lead to growth by reducing competition, increasing customer loyalty, and reducing marketing costs.

5. Give your sales team the tools and training they need.

Hiring more salespeople might help you snag more sales—but equipping your current team with resources to do their jobs better can be just as effective. Talk to your team to see what they think will help. It could mean arming them with better data or tech tools, offering ongoing training and mentoring programs, or simply making sure they’re knowledgeable about corporate strategy and goals. When sales professionals understand the company vision, they can better apply that lens to daily interactions with prospects.

Financing organic growth

In addition to advising on growth opportunities in your industry, your Truist relationship manager, leveraging a dedicated team of experienced transition advisory partners and industry-focused bankers, can help you evaluate and implement funding strategies that work for your business and goals. Here are some options to consider.

  • Loans or lines of credit to fund product development, market expansion, R&D, infrastructure upgrades, and more
  • Cash flow management strategies to free up capital for growth investments
  • Technology solutions, such as automating payables and receivables, to create efficiencies and save money

“There are so many ways to make organic growth happen,” says Cathcart. “Having a financial—and strategic—partner to help you sort through the funding options can put you on the right track to meet your goals.”

Looking for guidance for your growth strategy?

Your Truist relationship manager can help you identify growth opportunities and financing options to help you meet your goals.

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