Internal expansion is the process of growing a company through the use of resources within the company.
Internal expansion is the process of growing a business through the use of resources within the business, and not involving the use of any kind of external activity to attract new customers. Such growth can occur through handling customer referrals using in-house staff or making use of company resources to manage internal funding for opening a new location or expanding existing facilities. Strategies used as part of an internal expansion initiative are different from those used as part of external expansion, which relies on using strategies and resources external to the business’s ownership. Most companies operate with limited use of internal expansion, with business owners and managers often finding that a combination of internal and external expansion strategies may be in the best interest of the company.
One way to understand how internal expansion works is to consider the need for a business to increase its profits. Internal strategies would involve finding ways to reduce operating expenses without minimizing quality or customer support, allowing the company to retain more profit on each unit sold. Along the same lines, the company can even expand its customer base through referrals provided by current customers. Actual methods will vary depending on how the company is structured, but each internal expansion strategy would rely on using resources that are already internal and considered the stakes of the business to accomplish the tasks at hand.
The same general approach would apply if the internal expansion project had to do with opening a new company location. Rather than obtaining funding from a bank or other type of lender, the in-house approach would focus on in-house financing options, such as financing the project using assets held in a company building fund. Over time, the revenue stream generated by that new location would be used to replenish the construction fund, making it possible for the company to use that internal asset again in the future.
The concept of internal expansion involves using what is already internal, without trying to get out of those resources to achieve certain types of goals. This is different from external expansion, which would involve using external marketing firms, creating an external sales force of resellers, or using different forms of advertising to attract customers. Along the same lines, the use of external expansion methods for construction projects would also be avoided, meaning that the company would not seek external financing from banks, investors or other creditors to manage these projects.