The Case for Organic Growth
With U.S. companies having a lot of cash on the balance sheets and financing availability, the B2B market has seen a strong return to acquisitions. Being involved in a number of strategic M&A and due diligence projects over the years, we know that acquisitions can make important contributions to a company’s growth strategy. However, they are becoming expensive, particularly at a time when demand for quality properties is outpacing supply, and therefore, are becoming even riskier investments. Additionally, with Wall Street now looking at a combination of organic and inorganic growth when evaluating companies, now is the time for B2B companies to reevaluate their organic growth strategy.
What Choices do You Have?
When it comes to organic growth, companies can do one or more of the following:
- If you are in an industry that is growing, you can expand as your existing market grows
- You can take a bigger share of your existing market
- You can develop new applications of products and/or services that create value for customers in a new way
With a slow growth economy and an uphill battle to take share plaguing a number of B2B industries, many companies are finding that creating new approaches to deliver value to customers is an optimal organic growth strategy. The challenge, however, is understanding where customers have unmet needs, and how to successfully respond to those needs.
Meet Unmet Needs by Uncovering New Insights
During the economic downturn, a number of shifts took place within B2B channels, among end customers, and across the competitive landscape. As the market slowly returns to growth, companies no longer have to simply focus on the blocking and tackling tactics to sustain revenue. Today, new information, better customer insights and advancements in digital technology allow you to uncover the white space within your own market environment.
To ensure constant progress, B2B decision makers should ask the right questions about their organization’s current state as well as the industry, and where they are both heading. For example:
- What has changed among our customer base? Are there unmet needs?
- Are there new segments worth pursuing?
- What sub-segments are emerging?
Expanding in your market with products and/or services that create value for customers is not a short-term solution. It is more difficult, takes longer, can be risky, and requires a high level of strategy. However, the long-term gain is where B2B companies can achieve a competitive advantage and establish a balanced strategy of organic and inorganic growth.