A business is able to achieve growth in a variety of ways. This growth is often dictated by not only the success of the business but the amount of capital available to its ownership to make purchases and keep the bills paid. A business with a smart growth strategy and enough money can weather the early storm of business start-up to achieve long-term success.
Acquiring Other Businesses
A popular method of business growth for large companies involves purchasing other, smaller companies involved in the same area of the market. This allows the purchasing business to secure any proprietary equipment or production methods the smaller business might have along with any signature product. The larger business grows by assuming the store front property of the smaller business. The larger business can even retain the customer base of the recently purchased smaller business by continuing to feature popular products once sold by the smaller company.
In this method of business expansion, a central business allows entrepreneurs the opportunity to purchase the right to open a location bearing the parent business’ name. The new franchise location allows the parent company to grow while not directly taking on the cost of that growth. Franchise locations provide an opportunity for entrepreneurs to own a business with instant name recognition and client base. In return, the parent company receives royalty payments and franchise fees, and retains control of a variety of business practices at each franchise location from menu options to pricing and hours of operation.
Taking a business public allows for virtually unlimited growth potential. When a company is taken public on the stock market, it is no longer simply owned by one person but by each shareholder. The more people interested in owning a piece of a business, the higher the value of the stock rises. This has raised millions of dollars for publicly traded companies, such as Microsoft and Apple. The company can then leverage the value of its stock to open new locations, acquire new businesses and develop new products.
This is perhaps the most traditional method of business growth. When a small business attains a level of success and clientele where a single location can no longer support the demand, it is forced to open a second location. The new business location services clients who may not have been able to secure service previously and brings new clients who may not know of the business previously. Location can be a key element of this method of growth. A new business started in a bad location with poor foot traffic or inconvenient parking can lead to diminished sales which could scuttle growth.