Aug 092016
 

123This is the second part of my series on Business Growth. You can find the first one here. This time, we will be looking at the three myths of business growth:

  1. Businesses must grow or die
  2. All growth is good
  3. Bigger is always better

Since there is no scientific research that supports these myths, they are at best half-truths.  At worst, they are harmful fictions.

Let’s look at the first one, “grow or die.” More accurately, a business need only increase revenue to keep pace with increased costs. Steady, consecutive growth is not the norm – it is the exception. A better rule might be “improve or die.” Constant improvement is always possible: more effective sales methods, faster cycles, improved customer support, a better product – these are all things that you can improve each and every quarter. Consistently expecting 10% revenue growth every quarter is not realistic.

The second myth, that all growth is good, may be the worst one of all. Growth is not a good thing or a bad thing. What’s bad is too much growth before your company is ready or too little growth when you need it most. Growth can stress your resources, your finances, your staff, your quality controls, your vendor relationships, your supply chain, marketing efforts, and move your business into a different competitive space. These may all be things you want, but you must plan carefully for them. At the wrong time, or with the wrong people, growth may hurt your company rather than improve it.

Growing bigger may actually put you out of business.

The third myth, that bigger is always better, ties in with the other two. Growing bigger may not be better – it may actually put you out of business. Say you sell fountain pens to local, small law firms where your competition exists mainly from internet and mail order sales. Now you decide to take on national law firms because your profits will go up. Suddenly, you’re in competition with larger, national companies that have already been selling fountain pens to law firms. Can you compete with them? Can you reach those national customers effectively and compel them to switch? If not, your growth efforts may cost you more in the long run.

Not all growth is good, not all growth is sustainable, and growth does not mean “bigger.” Next time, we’ll look more closely at what growth is (or can be).

 

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