Is business growth optional?

An acquaintance and business owner emailed me:  "...I've never understood why business people are so obsessed with [growth], it just seems like an option to me...".  He is not alone - a significant proportion of owner-managers with whom I work or who come to my business seminars are averse to growing their business.  Often the reasons put forward are lifestyle choice, reluctance to employ more staff or fear that quality will suffer.

Now some of these are sole-traders or single consultants for which the term self-employed is more appropriate.  The comments below refer to business owners, by which I mean people who employ and organise staff.

Here are my reasons, in no particular order, for suggesting that growth is necessary for an owner-managed business:

1.  To be compelling for staff an organisation has to have a vision of something bigger than just the people involved.  They want to be on a meaningful journey;
2.  An organisation has to adapt, evolve and learn in order to survive in a changing environment.  Whilst a smaller organisation may be more agile, often developing additional capabilities and skills requires new people and to do it well and consistently requires the size to cover the costs of developmental resources (that is, resources not completely utilised in production);
3.  The bigger members of a species generally get the most food and their pick of mates.  Business is an ecosystem and, all other things being equal, you will lose to your bigger competitors in the long run as they improve margins through economies of scale and spend more on marketing, product development and so forth;
4.  There are economies of scale at all levels within an industry (so even small companies should operate more efficiently than their still smaller competitors);
5.  Even if you have a unique advantage over your competition it is advisable to sell more, invest in developing that advantage and so exclude competition from that space - or risk losing the advantage.  In this way a behaviour aimed at survival leads to growth;
6.  Investment (whether angel, pension funds or bank loans) will follow the best returns.  Whilst a private company does not have the exposure of a plc, in the long run growth means better returns and so easier access to funds.  Even if a business owner is not seeking external funding, he or she takes the decision to invest more in their business every day.  Rational behaviour is surely to seek increasingly good returns from that investment.

So growth may or may not be an end in itself but it is always a by-product for businesses that are fit to survive and in turn makes businesses more likely to survive.   Business owners who decline to take on the very real challenges of making growth happen are not only unlikely to achieve the latent value in their business but also run the risk that they will not be one of the fittest that survive.

So...is business growth optional?  Of course.  So is learning to swim.

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