When talking to most successful business owners, the word growth brings feelings of joy and optimism. But there are two sides to growth, the good and the bad. Practitioners need to understand that ‘good growth’ can bring greater success and increased revenue. ‘Good growth’ occurs when you are prepared for challenges and react in a positive manner to meet and exceed potential obstacles. With any business expansion comes new challenges and the need to meet customers’ expectations. So, you should keep the following in mind: you may need to hire staff, invest in equipment and inventory, and consistently enhance client services to meet your customers’ expectations. If you can successfully grow and meet the increased challenges associated with growth, I would say you have successfully managed growth. Most businesses thrive on managed growth, so the challenge is to find a growth level that is manageable for your business. While managed growth can lead to success, unmanaged growth can lead to problems.
When Can Growth Be Bad?
Growth is bad when the business products or services start to deteriorate due to rapid growth or growth that has created unmanageable challenges. This might result in the owner’s inability to forecast and prepare for a new challenge. For example, a business that is in the service industry must be staffed for growth. That would require the business owner to anticipate the growth, start hiring and training staff to meet the new customer requests, and be prepared to manage the services being performed.
Staffing for growth requires time and money, so the challenge then becomes when to make the decision to hire and train before it is too late. If you are too late, you could miss the opportunity to service your new customers’ needs. If you fall short of their expectations, there is a good possibility you will lose that customer. If you hire and train too soon, you could create cash flow problems and false expectations of staff that result in unsatisfied employees. Use all available tools to avoid circumstances of bad growth and understand the risks associated with it so that your business does not suffer as a result of bad growth.
Few businesses can open their doors and rely upon a group of customers for the life of their business. Most businesses require a steady stream of new and returning customers. Growth can be slow and managed or very fast. Each business is very different relating to growth. Some businesses have growth limits or restrictions that require additional decision-making and planning.
Developing a Growth Plan
A growth plan delegates the marketing of the business. It could require creating a division that includes sales managers and salespeople.
The following is a summary of areas to consider during growth:
Staff and Training
Monitor the Competition
What is rapid growth, and who is best suited for this? Rapid growth is defined as a growth rate of at least 20 percent. Therefore, if sales were $1 million last year, this year sales would need to be more than $1.2 million to be considered a rapidly growing business. This is best suited for businesses that have prepared for the growth and have put resources in place to make the growth successful. Business can experience expansive growth through acquisition or implementation of an aggressive marketing or sales campaign. Both examples require a well-thought-out strategy and are not necessarily right for all businesses and/or business owners.
Keep an open mind when it comes to growth—not only for the opportunity but also for the risks and challenges that come with growth. Monitor your business plan, budget, and financials so that you are prepared for growth opportunities and can evaluate their validity and make the proper decision regarding implementation.