The popular saying for any business model goes – “if you’re not growing you’re dying”, so whether you like it or not, standing still is catastrophic for organizations. Especially for small businesses, the focus has to change as it moves beyond the start-up phase. Here, identifying opportunities for business growth need to take center stage for long-term success. But not many companies understand that growth is elusive and require a deliberate approach to achieving the business objectives.
There are two major reasons why experts consider growth as elusive:
“Inadequate consideration of opportunities within the core business, adjacent to the core business or within new customer sub-segments.
An organizational infrastructure that cannot support successful execution”
Growth, in fact, means different to different people/business. For many businesses, growth is something that grows you, your employees, and team and grows an organization as a whole. It brings value to the business which is far more satisfying than just money factor. To be successful and stay in the business, growth, and profitability are two most important factors a company should consider that will help them remain attractive to investors and analysts. There are various consequences your business might face when there is no growth in an organization:
- There won’t be any growth in earnings and profits
- There won’t be any hike in employee’s income
- There won’t be any potential for additional jobs openings
- Reliable employees might leave your organization soon
- You will limit options to innovate new products and services
- Your business rivals will grow
- Business could stagnant and lose out on lucrative opportunities
- There could be a greater drop in the productivity factor.
- Existing infrastructure fails to support additional complexity if any.
- Your unique selling point might not impress your customer anymore
- Your industry ideas will develop, but you will be left behind
Having said that, growth remains critical for any company’s long-term sustainability. Moreover, the growth of market and sales is a path to gain initial profit. And growth in business is a stage wherein your business reaches the point of expansion and hunts for additional options to spawn more profit. In wider terms, growth is the most important factor in the business lifecycle, sustainability, valuation, and industry growth.
However, ushering a business from idea to long-term success is no cake walk. Many people go wrong and grow too quickly that generate risk for depleting resources and not being able to meet consumer demand. While there is no one-size-fits-all formula for determining optimal growth, still it is important to plan your growth so that it is managed and controlled.
Now, let’s understand why business needs to grow in order to sustain:
Growth is required for Sustainability – To sustain means to continuously exist in the industry for a longer period of time. For a business to grow it require sustainability and it cannot sustain if it does not grow. Business environment keeps evolving, so it is best for an organization to adapt to the evolving environment and grab the opportunities for its sustainability.
Growth builds credibility – When a business sustains for a longer period in the industry it kind of build credibility in the market. And an organization with good reputation and goodwill easily attract new investors, employees, and customers. The trust and confidence people have in your organization can have a direct and profound effect on the main objective of the company.
Growth keeps competition at bay – Competition often used to be seen as an inspiration factor for working better towards products and services. However, lately, competition has become a spike and business looks to avoid. When a business is constantly growing it helps to face the competition effectively at all levels. Growth opens the way for expansion and diversification that ultimately helps to keep stiff competition at bay.
Growth reduces commercial risks – Commercial risks refer to potential losses arising from the trading partners or the market. It’s a responsibility of product development team of any organization to cut on both technical and commercial risk after it is commercialized. It’s quite become an easy task for a well-managed and sustainable business to reduce the risk of falling over the precipice.
Growth helps innovation – The successful exploitation of fresh ideas is vital for a business to improve and progress. Innovation brings in new products and services while increasing its efficiency and push profitability. Innovation brings vast benefits for both consumers and businesses and a company can think of innovation only if it is growing at a sustainable rate. In the opposite scenario, a company loses its market share to competitors and fall short of productivity and efficiency if it’s not innovating.
Growth reaps partnership and joint ventures – When a business is experiencing growth it often plans for partnership, joint ventures, mergers, and acquisitions. The clear benefits of this dimension are more contacts, increase in market shares, lower commercial risks, broader customer base, favorable financing opportunities, more resources and way to enter a new market.
Growth retains customers – In a book “Leading on the Edge of Chaos, written by Emmet and Mark Murphy says acquiring new customers can cost a company about five times more than retaining current ones. In fact, a 2% of perk in customer retention can have the same impact as decreasing a company’s cost by 10%. Stable growth helps to retain existing customers, who are actually your best bet for increasing sales instead of finding new customers and persuade them to shop from you. x
Growth impacts profitability – Although growth is not limited to profit alone, it does helps to achieve and maintain profitability. Even in the organization that is good at profitability, there should always be scope for growth since this offers opportunities for greater overall profitability and sustainability in line with customer, analysts, and potential/current investors. In regards to business success, profit and growth go hand-in-hand, if profit is vital for handling financial survival, growth is key to profit and long-lasting success.
Organization looking to prioritize growth should have a growth strategy and need to plan carefully. Growth has its own risks, but the right strategy is capable to deliver stability, security, and long-term success. Once you have passed the start-up stage, start setting growth goals, involve management, control costs, and regularly review targets in order to just sustain the business and sustain well!