Organic Growth: What Is It?

If you’re just entering the job market, you’ve probably heard the term “organic growth” being tossed around by business professionals. But what does this mean? Organic growth simply refers to the growth in a company’s sales, profits, or size over time without any external intervention. In other words, it’s growth that is driven solely by inner forces such as increased demand for products or services, new initiatives, improved processes, or simply more efficient production.

Identifying Organic Growth

A company may be growing organically when it experiences a rising sales rate, increased profits, or adds new employees without any external intervention. For example, if a company continuously hires new workers without actively recruiting or if there is an increase in sales without any changes in product features or prices, this may be a sign of an organic growth. Organic growth also can often be seen from advances in technology or advances in market strategies, such as constantly introducing new and updated products.

Benefits of Organic Growth

Organic growth is generally more desirable than acquiring a larger company or merging with a competitor. Why? Organically grown businesses often are less expensive to manage, since no additional cash may be required to cover acquisitions. They also tend to be more internally focused, which allows the organization to develop a unique company culture. Furthermore, many companies may prefer to own their growth, since they do not need to rely on external sources to grow their business.

Conclusion

Organic growth is an important term to know when entering the job market and can often give a company the ability to maintain control of its own destiny. When a company is able to grow on its own, without taking on external debt or making large acquisitions, it can often come out stronger on the other end and better positioned for success.