What Does Business Growth Really Mean?

"Business growth is a buzzword often used in the corporate world, but what does it really mean? In this article, we explore the concept of business growth in detail!

22 Feb,2023 11:12 IST 2917
What Does Business Growth Really Mean?

Business growth as a term can have different meanings to different people or entrepreneurs. Some people might think of it as increasing revenue or profits, while others might consider expanding the company's reach or number of employees as the primary indicators of growth. In reality, business growth can encompass a wide range of factors, depending on the company's goals and industry.

At its core, business growth involves expanding the company's offerings, increasing its customer base, improving operational efficiency, or a combination of these and other strategies.

One of the most common indicators of business growth is revenue. When a company's revenue increases, it often means that it is selling more products or services, reaching more customers, or charging more for its offerings. This is typically seen as a positive sign, as higher revenue can lead to greater profits and a stronger financial position for the company.

Another factor that is often associated with business growth is the size of the company's workforce. As a company expands, it may need to hire more employees to manage increased demand, create new products or services, or expand into new markets. This can be a sign of success.

A more reliable indicator of business growth is the company's ability to generate sustainable profits over time. This involves not only increasing revenue, but also controlling costs and managing the company's finances effectively. By maintaining a strong financial position, a company can weather economic downturns and invest in future growth opportunities.

In addition to revenue, employee growth, and profitability, there are other factors that can contribute to business growth. For example, expanding into new markets or launching new products or services can help a company reach new customers and increase revenue.

The key to achieving almost all these independently and indeed together is to invest. This investment can take the form of equity or debt. Equity can come from the business owner(s) or from external shareholders. But this is not always readily available. Financial experts advise that even if one has access to such resources or ability to get other shareholders, they should also look at an alternative form of funding which is debt.

Business Loans

There are essentially two types of business loans that are available: secured and unsecured. In the case of the former, the business owner would need to provide a collateral to avail a loan. This could be ownership of a physical asset such as a factory premises or the business owner’s own house.

The more common form of business loan availed by entrepreneurs, especially if the sum required is not very large, is an unsecured business loan. These are provided by lenders based on their basic assessment of the business and the creditworthiness of the business owner.

How Unsecured Business Loans Can Help Grow A Business:

Control:

If one opts for adding external equity shareholders, it means losing a certain degree of control over the business. This reduces the incentive to push as an entrepreneur. It could also affect business decisions and thereby growth initiatives. With an unsecured loan, the business owner can maintain control over the enterprise and focus on growth.

Availability:

Unsecured business loans are easily available online, with basic KYC details and paperwork.
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Flexibility:

Lenders do not interfere with how the loan is used, providing flexibility for the business owner to deploy the money as required.

Collateral-Free:

No collateral is required, eliminating the risk of losing assets due to unforeseen circumstances in the event of a default.

Reasonable Interest:

Unsecured loans come with reasonable interest rates as many banks and non-banking finance companies are vying to lend to small businesses.

Working Capital:

Unsecured loans can be useful for meeting business exigencies such as a sudden new order or for meeting expenses due to delay in client payments.

Tax Benefits:

Interest expense for repaying the loan is tax-deductible from the taxable income of the business entity and if the enterprise is already profitable, it can reduce the tax outgo by deducting the interest payments as an expense.

Quick Disbursal:

Minimal paperwork and digital processing mean the loan can be disbursed quickly, without putting business operations or expansion projects on hold.

Improved Credit History:

Timely payments on the loan can help create a business credit history and build a creditworthiness score for better loan terms in the future.

Conclusion

Doing business is not an end in itself and every entrepreneur would like to see his or her enterprise grow in size and stature. Growing revenue is often seen as the most basic template for growth of the business, though one can have different parameters including spread of operations or profitability as the target. In all these cases one would need financial capital and a business loan is considered an essential ingredient for the same.

IIFL Finance offers both secured and unsecured business loans at competitive interest rates via a swift digital process. The company, one of India’s largest NBFCs, also customizes these loans to match the repayment cycle with the cash flow and to ensure that borrowers are not under any undue burden while repaying their debts.

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