(Part 3 of 4 in section 3.2 “Business Growth”) Organic Growth (Part 3 of 4 in section 3.2 “Business Growth”)

Organic Growth? What is it? Growth – have already talked about objectives – Profit, Revenue, Turnover => A business grows naturally by selling more of its output using its own resources

Methods of Growing Organically – remember your Business Strategy…

Positives of Organic Growth Retain Manage-ment control Steady growth = less DoS (?) Choose speed of expansion Knowledge is Power / Play to your strengths Use Scalable Model Cheapest to Finance + no premium payable (as in M&A) No problem with INTEGRATION Control of Risk

Disadvantages of Organic Growth? Inorganic (M&A) Pace too slow – let behind, Miss out on available resources, No EoS at early stage growth, No optimisation of sat IT advantage that might be scalable BUT advantage persists only in Short Term

Why stay small? (4th of 4 sections on growth) Starter: What does Orindi’s do better than Subway? Ownership and service connected (= more care); communication directly to the owner; local business more connected to local issues – traffic, Orindi’s may know SHS well already; owner may not be a profit maximser – large corp will be, personal service, flexibility, change to customers requests, use of space, no corporate policies that may/may not be suitable for local area, small firms may have lower costs (DoS hits early – no national ironing service!), low barriers to entry keeps small firms small due to competition. Small firms (owner) but be able to pay lower wages, small firm can be a (local) monopolist with a Geographic Monopoly. Regulation – no employment legistlation!

How can small businesses compete in markets dominated by large businesses? Examples: – Banking – Metro Bank or Crowdcube - Chocolate – Green and Black (but bought by Cadbury 2005 ), Venezuelan Black, Traidcraft --------------------------------------------------------------------------------------- Product Differentiation - USP - Specialisation – E-Commerce – Specialisation – Try and find a chimney sweep  or a VHS Video repair store; ecommerce useful where no EoS (and no ad revenue) – online shop/advertising/online service provision is all scalable.

Small businesses in the UK There were 5.4 million SMEs in the UK in 2016, which was over 99% of all businesses (<250 employees) Micro-businesses have 0-9 employees. There were 5.3 million micro-businesses in the UK in 2016, accounting for 96% of all businesses. Although the vast majority of businesses in the UK employ fewer than 10 people, this sort of business only accounts for 32% of employment and 19% of turnover.