Organic business growth, as opposed to inorganic business growth, is dependent on internal operations as opposed to achieving it by means of mergers and acquisitions. Organic business growth relies on the generation of profits to finance the growth of the company making it a far slower process than expanding the business by means of mergers and acquisitions. While a slower process, the advantage to organic growth) is that it does not require a cash investment. While every business seeks to grow organically, not all business owners are willing to wait as long as it may take to achieve the owner's goals.

 

Growth Company

A growth company is a company that generates substantial cash flow, but pays no dividends or distributions to the owners, instead opting to reinvest all cash ftow back into the company in order to maximize the growth of the company and future profits. A growth company tends to have very profitable investment opportunities for its core retained earnings. Growth .companies are often referred to as Gazelle Companies.

 

Network Effect

The network effect is a phenomenon where a service or product gains exponential value and usefulness as more and more people or companies use it. Critical mass is the point at which a network becomes self-sustaining, generating sufficient value to attract new users on its own. Companies with strong network effects generally enjoy high sustainable growth. Two early examples include the telephone and the internet. Other examples include barter networks, executive suite businesses, community newspapers, delivery or service routes, and some websites.

 

 

Inorganic Business Growth

Cross-Selling and Upselling

Reasons for Mergers and Acquisitions

Characteristics of Successful Business Executives

Ideas to Expand, Protect, and Improve Your Small Business