Why are we all so obsessed with organic growth?

How the glorification of “growing it alone” could be holding businesses back…

For many business owners, organic growth is the ultimate badge of success. Winning customers without funnelling significant external funding into sales and marketing is often viewed as a testament to a company’s competitive edge, proof of concept and financial prudence. But is this praise for organic growth always the right approach? And why does the alternative – raising investment – sometimes carry unnecessary stigma?

In this article, we’ll explore why the reverence of organic growth may be problematic in today’s economic context, misconceptions around organic growth and why external funding can often be a smarter path to scaling a business.

The appeal of organic growth

At its core, organic growth is seen as an indicator of a business (and its leader’s) strength. If customers are already choosing a business over competitors, without significant sales and marketing spend, it suggests the business has something special to offer —whether that’s a superior product, service, or brand. Organic growth is also perceived as cost-effective, as it doesn’t require taking on debt or diluting equity.

For business owners, there’s also an emotional aspect. Many have built their companies from scratch, often with minimal financial support, and they take pride in maintaining full control. Growth through reinvested profits feels like an achievement that’s been earned, rather than bought.

Organic growth is finite

But while organic growth may be appealing, for the reasons listed above, it usually isn’t sustainable.

For businesses in mature industries, growth of one business often comes at the expense of its competitors, making it quite difficult to sustain long term momentum. Even in high-growth markets, customer acquisition costs can increase quickly, margins can be squeezed, and new entrants can disrupt the landscape – sometimes seemingly overnight.

One of the biggest misconceptions around growth is that a business will continue to grow simply by doing what it has always done and what has always worked. In reality, standing still is the same as moving backwards. Without investment in innovation, marketing and continuous enhancements to operational efficiency, businesses risk stagnating and being overtaken by more agile competitors.

The stigma around raising external capital

Then comes the hesitancy by many business owners to raise external funding.

This reluctance is often driven by fear—fear of getting into “debt” (usually underpinned by a misunderstanding of what debt actually means for a business), fear of losing control, or fear of the unknown.

For the more mature generations of business owners, it’s a deeply ingrained cultural attitude; some may view borrowing as a sign of weakness, while younger entrepreneurs are often more open to leveraging finance as a tool for growth.

There’s also the influence of media and entrepreneurial culture. Success stories of self-made founders who “bootstrapped” their way to the top can create a misleading narrative. These stories often gloss over the reality that most businesses, even the most successful ones, have benefited from some form of investment, whether that’s significant personal savings, venture capital, or strategic debt.

While the UK SME community is making progress at unpicking these misconceptions, the notion that organic growth is somehow “superior” to growing via external investment is deeply problematic and potentially holding businesses back.

The missed opportunities of an organic-only mindset

The biggest risk of prioritising organic growth above all else is the missed opportunities. Businesses that refuse to explore external funding options may limit their ability to scale, expand into new markets, or invest in game-changing innovations.

A well-though out, considered approach to fundraising is not about reckless borrowing or unnecessary dilution – it’s about using the right financial tools at the right time to capitalise on opportunities and accelerate growth.

Whether via debt finance, private equity, or other, the right funding can accelerate growth, strengthen market position, and ultimately increase long-term business value. (And if you are interested in learning more about the different types of growth funding available to businesses, take a look at our Ultimate Guide).

Finding balance

Organic growth clearly isn’t a bad thing, just as raising investment isn’t inherently good. The key is finding the right balance.

Not every business is meant to scale to global proportions. Some are first and foremost lifestyle businesses, with owners focused on building a steady, sustainable income without pressure of broad or rapid expansion. Others see their company as a vehicle for massive growth and industry disruption.

However, even a lifestyle business must remain vigilant. In today’s competitive market, if you’re not actively engaging your customers, your competitors are, and businesses that fail to evolve in response to shifting consumer preferences risk becoming obsolete.

This means that decisions around growth need to be well-informed and based on strategy, not influenced by sentiment, misconception or unconscious bias. At a certain point, most businesses that want to take the next step on their growth journey will need to raise external finance – the important thing for business leaders to take away is that raising this finance doesn’t mean giving up control or “getting into debt”. It means gaining the resources to move faster and more effectively, enabling the business to accelerate its growth trajectory.

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