Business advice given to all entrepreneurs and managers is that business growth is essential. Fast is Best.
Do NOT follow it. Do NOT grow fast. It is the worst thing for your business.
The advice you receive is usually to serve the interests of investors, someone’s ego, or other ill-guided purposes.
Told that the growth needs to be rapid to outpace competition, prove their worth or significance, not fall behind, never lose out.
Investors punish shares when the company doesn’t grow enough in a year. If they increase less than the previous year or don’t meet expectations.
Society often equates business growth with success.
There is a perception that consistent growth is essential, even if not practical or aligned with long-term viability, the “why” of the business, or global sustainability.
When a company provides a business plan and budget it must show BIGGER numbers every year – more sales, higher profit, greater market share, etc.
This pressure and message drives the belief that continuous growth is necessary for survival.
It’s important to recognize that growth strategies should be grounded in sound business principles.
Not focused on short-term financial results at the expense of long-term sustainability.
The instruction to grow is too much of a generalization and driving growth can be entirely the wrong goal.
Business success is measured in various other ways:
- Customer satisfaction
- Societal impact
- Efficiency
- Reduced environmental impact with stable financial performance
- Influence
- Even reinvention of the business – successfully moving away from a product or service that is becoming extinct.
Two-thirds of the Inc. 500 fastest-growing private companies in the U.S.A. fail within five to eight years of making the list.
THEY ARE FASTEST GROWING AND GO OUT OF BUSINESS!!
Several research studies proved that companies with fast growth have lower survival rates, lower profitability, lower productivity, and lower market valuations than slow-growing companies.
The fast ones drive growth at the cost of cash flow (82%), appropriate niching against competition (19%), optimizing pricing or costs (18%), and even getting their product or service right (17%).
Is this a reason to give your business growth a rethink?
Do you NEED to grow? Do you WANT to grow?
Are the reasons good? Or it is a form of peer pressure or ego-driven expansion?
“Build on a rock, with strong foundations; you can add many more levels on top.
Not on sand, where foundations will be weak, additions will open cracks, and even the strong will collapse.”
Send us a note or a message at Info@ProteaConsulting.ca to discuss your questions, or for an opportunity to discuss how we may increase your company profitability, enhance your processes, and position your best people.
