- Weak competition
- Availability of fund
- Favourable government policies
- High demand
- Merger and Acquisition
- Entrepreneurial skills
Weak Competition
Competition affects business growth. Weak competition is therefore, an opportunity for business growth. When competitors are having challenges and may be closing shops, is an opportunity for a business to expand to take over the competitors position in the market.
Availability of Fund
If there are adequate fund and other resources, the business will undertake expansion projects. Business fund can come from different sources — Shareholders retained earnings, capital market, loans from financial institutions, and other investors. When investment funds are available at cheap rate from these sources, the business has the opportunity to carry out expansion projects. Most times, many small business owners do not take advantage of these sources of funding to grow their businesses for fear of losing the ownership or control of their businesses to others. Business growth fund can also come from government’s business support grants.
Favorable Government Policies
Government policies go a long way to stiffen or encourage business growth. When the government policies are favourable to local businesses, they spur business growth. The policies could be on foreign trades, taxation, interest rates, regulations and licensing, etc.
High Demand/ Scarcity
Businesses have the opportunity to grow when there is increase in demand or scarcity of goods and services. Some businesses have grown to a large size to meet the increased demand for their goods or services. Market size plays important role in a growth of a business. When the market size expands it presents business growth opportunity because it will stimulate increased productivity and the expansion of company. Demand or market size is largely determined by population and income of the population. Increase in population and income mean higher potential demand for goods and services.
Merger and Acquisition
Some companies in same industry can merge in order to wipe competition or become stronger to produce on larger scale and to take good percentage of the industry market share. When such companies combine, they become larger business units. Acquisition of competitor’s business is very good business growth opportunity. It eliminates competition and secures internal economies of scale and monopoly.
Advantages of Merger and Acquisition
When a firm combines with or takes over another, external growth is said to have occurred. The advantages of such growth opportunity include:
- Rapid Expansion: Taking over the operations of another firm is the quickest path to growth. The acquiring firm eliminates the lead time for ordering and installing machinery, producing the product, and achieving sales in the marketplace.
- Immediate Cash Inflows: Since the company is taking over a business in operation, it receives immediate cash inflows as the customers of the business continue to patronize the goods of the business. These inflows wouldn’t be possible if the company had to start construction of new facilities and then start to produce goods.
- Reduction of Risk: Entering a new line of business has a huge risk associated with it. But when merges or when the business acquires another business in that line of business, the risk is reduced because the acquired firm will be operating, perhaps successfully, in an environment familiar to its managers. By entering a field through an established and experienced management, we reduce the chance of failure.
Entrepreneurial skills
Acquiring new skills and knowledge to develop new products, control large business is an opportunity for business growth.
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