What is Business Growth?

When an organization is growing, what does it mean?

As it relates to entrepreneurial ventures, Organization growth is any increase in the level, amount or type of the organization’s work and outputs. It involves expanding, enlarging, or extending what the venture does. Growth encompasses increases in size, or coverage. Another dimension to growth encompasses a spirit of vitality and energy.

An organization that is growing is vibrant, and flourishing. It is striving to be excellent.

There is a level of excitement about what is being accomplished in the organization and a strong desire on the part of organization members to be part of organizational growth. (Coulter 2005).

Business growth means the first significant increase in sales, revenue, and employees after the start up whereas Business expansion can be described as increase in market and size of the firm after the first growth.( Bridge Simon etal 2005)

How can one measure Business Growth?

Nieman and Bennett (2006) argued that Growth is, inter alia, measured in financial terms by factors such as:

• Turnover

•   Profit

• Total assets

• Net assets

• Net worth, and

• Increase in number of employees.

A growing business is likely to be differentiated from the one that is not growing.

There are some yardsticks that can be used to differentiate the growing business from the one that is not growing as follows:

Share value, Net worth, profit, number of employees, Turnover, return on investment, size of premises, standard of service, profile/image, number of customers, market share, export/import substitution, new product/service, innovation, and patents ( Simon 1998).

Coulter (2005:328) argued that there are number of variables which have been used to measure growth. The most common ones are financial-increase in sales or revenue, increase in venture capital, increase in profitability, or other financial measures.

Growth has also been by the number of customers, products, locations, employees, or any other characteristic that could be quantified.

As one can see it is easy to measure growth, if one can quantify the factor. It doesn’t matter what the factor is. In fact, it should be one that is important to a specific type of one’s entrepreneurial venture. So one has to look closely at his entrepreneurial venture and decide how he is going to measure whether the business is growing. Whether will it be number of clients served, number of outlets opened, type of products offered or what?

Also define what financial measures one will use to evaluate whether the growth strategies are working. Will it be sales (revenues), profit, or some combination or variation of these? It doesn’t matter which measures you use, but it does matter that you use some factors to measure growth that are appropriate your type of business.

It must also be kept in mind that growth cannot be adequately explained from a single perspective, but individual, organizational, and environment research domains predict venture growth better when the web of complex indirect relationship among them is included.(Baum, Locke & Smith 2001:301)