Is business growth an option or a necessity?
guys, when we started off a business, we will working on growing it until it becomes mature. What than after mature? we will be talking about maintaining the mature business ... but than, what is maintaining, can we really able to maintain? Most of the time I observe the business will decline after mature, many times keep on growing seems to be the only option. How about your view?
This is difficult, but I think that your business must constantly improve, otherwise there may come a time when it will not be relevant. I'm not saying that you should turn your small family business into corporations with billions of dollars if that's not your way. But if your business stands still, competitors or technologies can drive it out of the market. For example, a small family hotel, if you do not improve the approach to customers, accommodation conditions, at one point your offer will not be attractive in the market. You can also read this article about professional business brokerage, which can help strengthen some business knowledge
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Expansion of business is necessary becoz it enable you to re-evaluate your present trend and upgrade your existing system.
Hi JC, from my vantage point as a Sales Consultant in the IT Professional Services industry, business growth will remain an ongoing focus goal. At the point of business maturity, when we have even more partnerships in place and our clients are continually calling on us to engage in projects, we will still need to focus on growth. Why? Because you can never count on business maturity as a guarantee that you won't lose your footing amidst the competition. As well, it fosters a sense of never getting too comfortable with a winning position in your respective industry. Hope this helps a bit, and I wish you much success in your endeavors. Sean
While not the only option, growing is the only practical option. Maintaining in a world of constant change is a losing proposition. Customers, product requirements, distribution channels, substitutes, etc. are all evolving around you. Maintaining in most instances is not an option. Anticipating change with a goal of growing your business is the only real option and may result in "only" maintaining.
Business growth is a necessity.
If your product is at a mature level you have three options: Innovate the product or penetrate new markets or sell your business.
The market penetration can be done through the franchising method for example.
The product innovation can be done throught the change on one or more characteristics of the product giving it one or more utilities, market it on a diferente way, make events and promotions in order to improve the consumer product's knowleadge.
Business growth is conditions of technical, social and family systems
Businesses generally follow a "bell curve" with fast growth initially, plateauing, then a downward retraction.
Nearly all businesses, once they are mature, either need to re-invent themselves or accept that they will decline.
The good news is that a rapidly growing business generally burns cash to grow, a business in maintenance mode, generally produces free cash, and a business in decline generally produces the most cash (cash is not burned as readily on growing or maintaining the business)
The options at the plateau stage are to reinvent the business, sell or accept that the business is going to decline and milk as much cash out of the business as possible.
It takes courage, tenacity and cash to reinvent an existing business, sometimes you are better to sell it at the peak and buy a business that you can build up...depends on your skillset
You can make a business out of selling the same old thing year after year if you are unquestionably the best at what you do. Craftsmen and mom-and-pop businesses can do that, although you still have to sell to replace departing customers. Any larger than that and someone will enter your space to compete with your nice fat happy business. You'll also find that your best staff people want an upward path for themselves too, so you'll have to accommodate that need either by growing or by increasing margins (which usually requires growing the product line).
Maturity can lead to death if you do not maintain a strategy and expand or diversify. Simply maintaining the status quo without any recognition of the changes in the customers or the marketplace, new technology, political and economic threats etc will lead you down the path of obscurity. Thats why you should conduct an annual (at least) PESTLE assessment and re-strategise - what we call a TRP (Total Risk Profiling) and identify all the SWOT elements and formulate a new strategy each time. If you don't have a strategy, you have no destination.
Even when in most of the business schools they teach that the growth is a need, I strongly bealive that is an option, even more nowadays with small or negative growths.
I believe there are too many variable to manage to purposely maintain a business in a static position...you are either growing or in decline (you may not see the decline as it can be subtle for a while) But not making every effort to be current with client and market requirements, competitors initiatives, efficiency of operations to offset ever increasing costs, a work environment to attract and maintain the required human skill sets and experience etc will lead to a non competitive business which is in a state of decline
growth is partly passion and necessity ,stability can be very hard
I used to ask myself this question all the time, especially at a big corp. where there were millions in profit. I see it now working with many smaller companies and I think the only correct way to look at it is the old saying that was crammed on me..."You are either growing or dying." Now that's true of all of us and it might be a long, even happy life without growth, but it creates all kinds of bad habits, makes you lazy and inefficient. It's like getting middle aged and deciding you can sit on the couch and get fat, you might find that satisfying, and lord knows it's epidemic, but is that the healthy, admirable choice?
A business is no different than a tree.... In order to stay alive.... a tree must grow. If a tree does not grow the vegetation surrounding the tree will eat up the nutrients and the tree will weaken and die.
A business needs to grow, expand within it means or the competition will either duplicate the ideas or processes and smother the business out of existence.
A friend and colleague of mine says you're either green and growing or ripe and rotting. Your competition will continue to evolve, so if maturity=stagnation you will fall behind and decline.
Some entrepreneurs who like the growing phase choose to cash out when the growth starts to slow and move on to something else they can grow quickly. They like the thrill of the learning curve. The new ownership brings new ideas, a new twist on things that prevent the company from stagnating under the weight of habit.
In this world things are either growing or they are decaying. The same applies to a business.
A stable state of maturity is text book theory rather than reality.
In the real world every business has to continuously improve which ranges from developing or changing processes and procedures as client or staff needs change to developing whole new products and services and retiring others as the market demand shifts or some other underlying factor makes the product or service no longer viable and/or profitable.
Growth doesn't necessarily mean growing in size, it can be pruning away and replacing what isn't working well so that your profit grows without taking on new people.
I find that continued market research and updating the business after it has matured keeps it fresh
I have a friend that is a business coach that did a whole series of interviews with businesses (usually family owned) that chose to contain growth and maintain a lifestyle instead of shooting for continual growth. The key is that they did more than just create a job. They were able building retirement income through their businesses. They also had built up a strong client base with a waiting list, ensuring they had replacement customers. They all had superior products in niche markets. Maintaining a business is absolutely possible if you have the right product line, demand that outweighs supply, and you have the right motives.
Hi Mr. Quek,
Business growth, and maturity are two different aspects although they could be connected and the growth can come before and after maturity based on how the owner chooses to.
For example can take off quickly as the product has a high value proposition, easily affordable and a global need. So as it grows and seeks revenue, it can take the time and luxury to mature and streamline itself. On the other hand a business can mature itself by seeking all the elements in place and then start ramping to a certain level to bring the needed ROI.
Now, your question on what then after growth or maturity is a great question. I see it as based on three factors partly autocorrelated to each other, but can treated as mutually exclusive.
a - Income per Year (Absolute) - There is a need for so much revenue after taxes per year and this has to be met.
b - Income Velocity - $/Day or Hour whichever is appropriate. The FTE doesn't quite fetch this as the boss wouldn't pay for time put on extended hours at office or home or else even on the flight. In fact with an increased "a" measure one can have a decreased "b" level as the hours of engagement increases so much that it diminishes the measure "b." Finally, most important for all of us in a common way...
c - Downtime (or leisure time) - This is the killer and measure "b" is the destroyer of this. If we end up increasing "a' crazily and not taking care of "c," then we are heading to a situation where we have "Operation Success" and "Patient Died." Today several folks end up at the surgery table much wealthier, but much younger. After all, we took the job or project to meet a certain purpose in life and if the purpose was nothing beyond the money, we lost and also caused a loss for others around our lives who depend on us being around hale and healthy.
So, when a business owner has growth, sustainability, maturity, and a great health, there is nothing else better than that. In a virtual world today, this is possible and has been done, which would otherwise been difficult if we had to be somewhere to create the income or wealth we refer to these days.
Good luck in your business (if you are in it or contemplating it).