Business “Growth” – Good, Bad or Both?

A colleague was recently assisting me with some ideas about a presentation I was preparing.  He asked me about the subject for my talk and I told him that it would be a summary of my workshop and book, “The 10 Seeds You Must Plant to Grow Your Business”.

He looked doubtful and said that, in his case for example, he was not looking to get more customers, as his business had been in operation for many years and had built a client base that produced recurring activity. His point of view was that not all businesses were interested in growth for the sake of growth. This got me thinking about the subject of “growth” in business; is all growth good and beneficial? Is it, in fact, a worthwhile ongoing and continuing goal?

In an article in Business News WA last year, News Editor Mark Beyer wrote about the problems within Forge Group which largely came about as a consequence of its aggressive growth strategy. “….it has achieved extraordinarily rapid growth in a market where many of its peers have been battling to achieve any growth,” Beyer says in his article, and follows up with “...But bigger, clearly, is not better.” He goes on to relate how the Forge share price slumped from its peak of $6.70 early in 2007 to $4.18 before entering a trading halt. The most recent news of its liquidation is the final chapter in this particular story of a misplaced growth strategy.

The article reminded me of a statistic from somewhere in my distant memory that business growth was, in fact, the single major cause of business failure.

I tackled this issue in my forthcoming book, which has the same name as the workshop and the following is an extract:

“Up to this point, it’s all been about business growth and it would be fair to ask “So, if we plant all of these seeds, nurture them and ensure that the soil remains fertile, does that mean we’re guaranteed success? Can we be assured that nothing can go wrong?”

No. And, NO are the answers.

Let’s continue with the garden analogy.

If we overplant, apply too much fertiliser or overwater, we will often get growth that is too lush and there will be too much vegetation for the soil in which the plants are growing. What happens is that the fruit is affected and productivity reduced.

Unrestrained growth in a business can have similar consequences. In fact, in some areas of the western world statistics have shown that the greatest cause of business failure is, in fact, growth itself. So, here is the paradox: we have no option but to ensure that our business grows, but, at the same time, we need to control that growth so that it does not become its eventual downfall.

Just as growth in the garden will put a strain on all of the components if we attempt for too great a harvest in one season, so will business resources be stretched to breaking point. For growth comes at a cost; more capital, more physical resources and more people, most of which will be an expense well before there is a return on that investment.”

 

If we were to have any further reservations with regards to growth, we need look no further than the duopoly that has developed within the Australian retail grocery market. While the “big two” boast about their success in delivering lower prices to buyers, there is ample feedback from suppliers to indicate the cost at which these “low prices” have been delivered. Whole industries and small family businesses have been threatened as an outcome of competition between the supermarkets.

This cannot be good for our community and come as a consequence of two businesses that just had to grow bigger – obviously, at any cost.

So, plan to grow by all means, but not by any means. Define what growth means to you and your business then plan to grow within that definition.

Growth in numbers is good, but growing as individuals, as leaders and as honest contributors to the greater community good is far more important. The development of solid values and then living and dying by those values places business at the forefront – and in a much higher place than those who boast about “Down, Down”.

My eventual response to my colleague was that growth does not necessarily refer to more revenue, more customers and greater profits. It can mean getting better at what we do; making the workplace a better environment; doing more good things in our community; providing more opportunities; creating a business that is enjoyable on all fronts for all of the people involved.

  • Posted by Amy Gyles on 10th August, 2018 1:38 pm
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What John Matthew believes about small business

That the owner has risked many things that others take for granted;

That there is no guaranteed income or reward for the considerable effort that is required;

That often, the family home is on the line to support the business and its constituents;

That there is a dignity and self-respect that is earned;

That entire communities would be better places if there was an increased appreciation and respect for small business.

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