Is Business Growth Optional?

A significant proportion of owner-managers 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.

They of course have a choice – but here are some reasons why growth is necessary for an owner-managed business:

-         Sub-scale businesses suffer from “feast and famine”.  Even relatively modest wins can overload the organisation whilst a slight downturn in sales can be life-threatening

-         A resilient client base implies a large number of clients and the ability to replace them.  It is less risky to be bigger

-         Clients, particularly  big important clients, are intolerant of suppliers who are unable or unwilling to grow to meet their demands

-        There is a minimum size at which a business becomes self-sustaining; that is, where the organisation survives the loss of any individual or client and the capability to survive and thrive is proceduralised within the business processes

-         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 that allows them to achieve their potential

-         An organisation has to adapt, evolve and learn in order to survive in a changing environment.   Whilst smaller organisations may be more agile they struggle to carry the overhead of this development capability

-        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, smaller businesses lose out to larger ones as the latter improve margins through economies of scale and spend more on marketing, product development and so forth

-         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

-         Research shows that survival rates improve with business size, particularly where this is combined with a wider range of products*

So growth may or may not be an end in itself but is a by-product of survival - and in turn makes businesses more likely to survive.  Being too small is not a sustainable position.

 *“When is more better? The impact of business scale and scope on long-term business survival, while controlling for profitability”, Bercovitz & Mitchell, 2007

To learn more, contact Nick Bettes via his website