What Is The Difference Between Real Internal Growth And Organic Growth?


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Ian John answered
To answer this question fully it is important to understand what each of the terms above is defined as in the business world, which then allows us to clarify the difference between the two.

The real internal growth (sometimes shortened to RIG) of any company is the amount of new business that the company has managed to generate from its central base of operations, without having to call in contractors, advisers etc. An example of real internal growth would be a company that already develops an existing line of products and sells them at a profit. Should said company develop a new product from its existing technology, allowing the business to move into a new market area and thus fund the growth and expansion of the business, this would be termed real internal growth.

The inclusion of the word "real" means that the level of internal growth needs to have been clearly measured and as such, is not a forecast of how much growth the business might achieve; instead, a declaration of how much growth it has achieved.

Organic growth is sometimes interchangeably and erroneously used to mean the same thing as RIG. The organic growth of a business is a projection of the rate of growth a company could achieve by increasing their output, becoming more efficient and increasing their level of sales.

This does not include any profits or growth the business acquires through takeovers, investments, acquisitions or mergers as these are not deemed as a being an organic part of the company's development.

Therefore, the difference between the two is that RIG refers to the actual measurable level of growth generated by a company, whereas organic growth refers to how much the company could grow if they start to become more efficient, sell more and hit sales targets in the future.

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