Organic Growth vs. Growth Via Acquisition: Which is Better?

In the question of organic growth vs. growth by acquisition, I unequivocally favor the latter. Organic growth, while offering the most predictability and control to the business owner, takes time. Even when the right products or services are in place, market evolution may be so slow that investment for expansion cannot be considered wise.

Acquisition, on the other hand - if done correctly - can provide the means and advantages to sustain faster and sometimes exponential growth. Suppose one company is positioned to grow but lacks one or two elements necessary. Joining with another company which possesses the missing elements can create the impetus for instant and stable expansion. An existing customer base, a history of profitable operations and an effective sales and marketing system can tip the scales by providing for immediate economy of scale or attracting financing. A highly opportune acquisition can do much to weaken competition and break down barriers to direct market penetration. 

Inorganic growth can create its own problems. Depending on the circumstances of the merger or acquisition, care must be taken maintain trust and communication with leadership and employees and to allow for as little as possible negative disruption of company culture. Sometimes due diligence does not reveal something that may prove to be very detrimental to success. However, in my estimation, the advantages of smart acquisition far outweigh the benefits of sticking with organic growth only. 

This is not to say that organic growth does not figure into my definition of responsible business growth. In my view, the work of organic growth - impeccable customer service, timely and well-targeting marketing and discerning product development - is to be whole-heartedly present in any company that purports to bring a quality product or service to the community. Pursuit of the customer’s best interests via better products and better prices are what makes a business viable; lack thereof will lead any business to failure.

The truth is, however, organic growth will take you only so far. An injection of inorganic growth is the best way to boost a company to the next level, particularly when competition is high. I advocate imaginative but careful increase of resource by the purchase of existing businesses. 

With the right knowledge, the right kind of merger or acquisition will act as a springboard, in terms of service to both community and economy, as locally as necessary or as globally as possible. One of my passions continues to be urging responsible small and medium sized business leadership to look for ways to impact wealth - both its responsible use and the policies that shape it. Small business ownership is critical to offsetting the widening gap between the riches of the few and the paucity of the majority. Inorganic growth would hasten the means of such impact.