Simon O’Rourke - CEO and Founder of EIRCA Ltd Online hideout of Simon O’Rourke

Vertical VS Horizontal growth (part 2 of 2)

A few days ago, I introduced the concept of horizontal growth.

This post will introduce the concept of vertical growth. Contrary to the concept of horizontal growth, vertical growth is achieved without acquisitions or mergers.

This concept is one that many say will benefit your company the most, as opposed to growth through mergers.

A company that starts from scratch and slowly but surely builds upward by maintaining their market and.or clientbase would be a prime example of vertical growth. The downside of vertical growth is that it inevitably takes much longer to grow to a medium/large size than, let’s say, a company that has achieved horizontal growth.

A major benefit, though, of vertical growth is the steadiness of your brand. Mergers can lead to dillution of a brand but with vertical growth your brand depends solely on one company. A rise or fall in sales and/or brand awareness is easier to track; it can nly have come from one place and can only be solved by one company.

Vertical growth is my favourite of the two. EIRCA even went as far as to horizontally decrease our company size by selling a subsidiary. One of the reasons for this was because of brand dilution. The EIRCA brand was rapidly becoming secondary to that of DIYHosting, our former subsidiary. This can happen very easily when you have split brands and it was something we needed to correct. The company’s direction now is singular and concentrated. Up, up and away, as the saying goes.

I have had many an opportunity in the past four years to merge with or acquire another company (mostly competitors). I have however turned them down because their brand did not offer the same historically clean opporunities as the EIRCA brand.

In the end it is up to the company management as to whether they want to grow horiztonally or vertically. Both have their advantages and their pitfalls.

At the end of the day, growth is growth. If your company is growing then you are successful in at least one of the two concepts outlined in this two part post.