What Really Is An Internal Growth In Business?(Fully Explained)

Internal growth in business
internal growth
Internal growth or business concept

Internal growth in business is when a company begins to grow internally. It can occur in several ways, but it usually involves developing employees and encouraging them to advance within the organisation or externally with other companies.

Internal growth occurs at all organisations; however, larger companies may specialise in internal career development more than smaller ones. Internal businesses can encourage their employees’ advancement by awarding promotions for outstanding performance on current jobs and providing management training programs to prepare their managers to take over future leadership roles when necessary.
Some examples of when an employee might receive a promotion include quickly becoming proficient at their job duties after repeated practice or showing great promise in additional skills beyond what was required of them. 

What Really is Internal Growth?

internal growth
concept of internal growth

Internal growth in business is a concept where the company will invest money back into itself. Internal growth can also be done to expand its services and product range by expanding its product line, buying new equipment, building a factory, etc. Internal growth in business means that your revenue increases through internal sources rather than external ones, which are usually slower than the inner source of income generation.

For example, if you sell an item on eBay, it could take months before you get paid, but when you go out and buy something from different shops, they will charge immediately. So this difference between Internal and External sources determines how fast one can grow their income. Even though there might not be much difference in amount, time-wise, Internal sources prioritise external sources of revenue.

Internal growth is a strategy that many companies use to increase their revenue without making any external investments. For example, If you have an apple store and the sales of iPhones are going down, instead of investing in another market or launching a new product line, the company can cut its prices on iPhone’s until they start selling again. This will save them money that would otherwise have been lost if they expanded into other markets by hiring more employees.

Also, this method does not require as much time as it takes to introduce a new product, so Internal growth saves businesses time and money, making it very effective when used properly.

This strategy should be used only by the companies already making profits, but they want to increase their net income. Internal growth has many benefits; for example, Internal sources of revenue generation can give you an advantage over your competitors because it allows you to make more money using fewer resources. Also, an internal source of growth does not require as much time.

Since there will be no external investments, this lowers risk factors, unlike if a business invests in another market or product line, it will take months before the company starts reaping any returns, which increases its risks tremendously.

Internal growth means that instead of expanding into other markets with high competition from all around the world where chances are slim, you decrease prices on products until sales start going up again, thus saving both time and money. Internal growth is not a strategy that should be used for making profits; it’s only used when you want to increase your net income or if you are already in the black but still need more cash flow because Internal growth is very effective when done properly.

In addition, it is the process of increasing a company’s revenue or profit without acquiring external companies. Internal business growth can occur by:

  • Finding new customers and serving them better,
  • Offering existing customers more products and services they want to buy, 
  • Using technology that increases productivity and reduces costs at all points in your organisation’s supply chain. Internal growth means finding ways to extend beyond traditional boundaries within an organization. Internal corporate expansion usually involves expanding resources such as product lines and territories served (geographically), distribution facilities owned/serviced (including international) etc., while also adapting internally through changes to manufacturing processes; financial management procedures; Human resource policies & practices; information systems development; supplier relationships with around five key suppliers around the world

Advantages of internal Growth

internal growth
Truly a way to success!!

Implementing an internal growth strategy comes with great advantages or benefits. Let’s have a look at some of these benefits of implementing internal growth to your business.

  • Great level of independence and ownership: Internal growth is often considered a more stable form of business expansion than mergers and acquisitions because it allows companies to take full control over their destiny in many cases. If not implemented well, there are certain instances when this type of strategy can backfire.
  • A safe and effective form of business expansion: Internal growth provides an organisation with the ability to grow through controlled means that increase overall company performance while minimising risk at the same time. This is why management teams should always be given serious consideration whenever they’re evaluating different forms of business expansions for their organisations.
  • Internal growth helps reduce external risks involved with running a business like competition from outside sources that may take away market share by replicating your offerings in the market. 
  • Boosts your level of knowledge: for internal growth to occur, there needs to be a high level of knowledge and understanding of the company’s strengths and weaknesses. So, implementing the strategy would help the leadership of the organisation gain a full understanding of all operations carried out in the organisation.

Disadvantages of internal growth

internal growth
Business man checking what’s wrong in the internal growth of his business

Internal growth can be very effective in some areas, but not all. Internal growth is great if you have a lot of capital to spend on advertising and marketing your company yourself. However, when that isn’t the case, it’s better to hire an outside firm for these services because they are usually much more efficient than internal staff members would be able to do themselves with little investment. 

  • Another disadvantage of using internal employees is you will always need someone overseeing them, making sure things are getting done correctly or even completed at all, which takes time away from their actual work, leading to slower productivity overall. Internal growth also doesn’t allow you to expand into new marketplaces as quickly since there need to be approvals made before any ads go live, new employees hired or even contracts made.
  • Also, Internal growth doesn’t provide the flexibility needed to take on a lot of projects at once since there will always be an employee bottleneck, and they can’t multitask effectively when they are overwhelmed with one task at a time (e.g., advertising). 
  • Internal growth can also lead to high turnover rates if you don’t pay your employees enough because then you’re most likely only going to attract those who truly need these jobs and not necessarily want them. This makes it hard for teams and companies, in general, to stay motivated, knowing their peers may leave any minute now. 
  • Internal growth costs more than hiring outside agencies too-things like salaries, benefits, training etc. all cost money that could be saved if you hire an outside agency to handle these services for you. 
  • Internal growth also isn’t the best option for building a team, especially in competitive businesses where quality is needed over quantity. Since there are so many employees within your company already, they may not have room or time to work on new projects, limiting creativity and innovation.
  • Internal growth also takes up more time than hiring agencies would because of all the approvals required beforehand rather than just starting working right away with external help. Internal growth requires much more maintenance. You need people who know how each department works together; otherwise, things will fall apart no matter what management strategy you use (e.g., micromanagement). 
  • Internal growth also doesn’t allow you to understand your services overall since things are being done from the inside out rather than learning about them from an outside perspective first.

Internal Growth vs External Growth

Internal growth in business Vs external growth is a common question that many entrepreneurs are faced with. Internal growth means growing internal aspects of your company like employees, internal systems or businesses (switching companies). In contrast, external growth involves increasing revenue through outside efforts such as marketing and sales.

The debate continues on which route to take for each company based upon the market conditions they face at any given time. Still, it seems most successful companies have utilised both internal and external tactics equally to grow their bottom line profits year after year. It’s important not to rely too heavily one way or another because you can quickly fall behind if other competitors start gaining ground due to increased focus on internal factors.

However, don’t focus solely on external factors like marketing and sales because internal factors like employees and internal systems will quickly become overwhelmed and negatively impact your company’s performance


Five internal growth strategies

internal growth
Diverse team of people meeting to discuss business growth, consultant presenting sales report and marketing statistics. Coworkers brainstorming ideas to plan company internal development.

Internal growth is one of the most important things for businesses to focus on. Internal business growth strategies are necessary to ensure that a company grows while staying in line with its main mission. Here are five internal growth strategies you should consider implementing within your organisation!

Develop existing talent 

  • Identify what skills employees currently have and how they can use them more effectively.
  • Give training if needed.
  • Be careful not to over-train or no longer need some roles when you reduce headcount later on down the track. 
  • Set targets for your teams so that everyone knows where there at and what’s expected from them.
  • Increasing staff capacity: If there are people who want to increase their experience within an organisation, it’s important to help them grow with exposure by giving them opportunities.

Embrace change

Embrace change is the internal business strategy that I am most passionate about. It’s also one of my favourite topics to discuss with clients because it’s so close to their hearts and has such a significant impact on their long term goals. People are inherently opposed to change, even when they know in their heart of hearts that it will be for good, but there aren’t any other options if you want your company or brand name to remain relevant in today’s ever-changing marketplace.

To embrace internal growth as an internal business philosophy, companies must have a core group dedicated solely to identifying new initiatives that help propel them forward into newer markets while keeping up with current trends. 

Expand geographically

Expand geographically for internal business growth. It means to expand your geographical area or customer base by opening new offices and markets, acquiring competitors, partnering with other companies, entering into joint ventures and so on. 

Improve existing products 

It is important to have a strong internal business growth strategy. This includes knowing your customers, their needs and wants, understanding your industry’s market trends, and ensuring that you are set up for success in years to come. You can improve existing products by looking at all of these areas and being prepared with an internal knowledge bank so that when questions arise, there is someone who knows how best to answer them accordingly.

Innovate new products 

If you’re looking to improve internal business growth, then Innovate new products is your answer. This strategy will help push the limits of internal innovation and allow for continued success in internal business development once we get down to it!

As always with any internal business venture, key factors must be considered: resources, competitive advantage and company culture. First up on our list of considerations is resources – this includes employees and budgets. Two ways innovating new products can affect staff; they could either work more hours or lose some shifts/hours due to changes within the job scope (which may not necessarily be a bad thing). Secondly, budgeting sits back at the human resource level again because if people need extra training, someone has to pay for it.

Wrap up

Many employees will tell you that they are happy with their current job but would like to be challenged more. They may not want a promotion, per se, but rather an opportunity for growth on the same level of responsibility or within its structure.

We can help your internal business grow by implementing programs and initiatives that encourage self-development at all levels of an organisation–including managers who are prepared to take over future leadership roles when necessary. Think about what type of training program might work best in your situation so we can get started today!

Subscribe to our Newsletter

Recent Posts