Main factors of exponential growth

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The ultimate goal of any business is to experience significant and rapid growth, but to be able to cope with the extra demands placed on a company due to exponential growth, the business must prepare for the increased demand for its products and services.

Of course, a business that isn’t prepared for the extra demands placed on it during a period of growth will risk losing its customers due to problems with the products and delivery, along with production limitation. There are many factors that can influence exponential growth, and here are some of the main ones.

Innovation

Customers appreciate new products or improvements made to existing lines. If a business can create an innovative product that has existing demand from its customers, the company is likely to experience a period of exponential growth. To be able to deal with the increased demand, a business has to be able to provide more machinery, equipment, raw materials and possibly larger numbers of employees. This type of growth is often short term, because innovation is constant and there will always be an improved or new product to attract customers.

Financial support

A company with a strong source of financial backing will be able to expand too. Investors of all kinds want to see their investment grow and will invest capital to enable exponential growth. The financial backing will allow further investment in machinery, equipment and staff in order to increase production to meet the demands. Investors will reap the rewards as their returns on the investment increase and they receive their initial investment back.

Demand

Changes in the market can affect demand for goods and services. Economic circumstances influence the spending habits of consumers, which could lead to exponential growth for a company. During the recession, consumers increasingly turned towards cut-price goods and started looking for bargains, whereas companies producing luxury items may have seen a shortfall in demand. The increased revenues could result in short- or long-term growth.

Lack of competition

If you supply a product or service that has a high demand, but you have no competition in the region, you may experience a period of exponential growth. If a company owner spots a gap in the market for a specific product and fulfils that demand, growth is likely, and could be even more significant if the business has no competition.

Dealing with growth of this magnitude can be excellent news for the company, but requires significant organisation. Outsourcing to management accountants will help to prepare the company for a period of growth. If you would like to discuss this further, contact us for an informal chat.