What is one reason you could give a business owner for why a business has to grow?
Don't explain, just list a thought... I did a training presentation recently on Creating Growth Mindsets for Business and started it with the question above. Avoiding cliches (grow or die), we brainstormed answers. There were so many but with such a great wealth of biz brains here, I thought it could be a great resource to Business Owners to have our community share 1 simple insight each on a briefly stated reason a business must plan/prepare/act to grow. (Please list 1, don't lecture) So many small business struggle with this, or struggle to give it meaning, I thought your thoughts could add inspiration...
Profitability and positive cash flow first. Growth third.
I'm reminded of a quote from a great Hockey player, Wayne Gretzky: "Skate to where the puck is going to be, not where it has been."
In business, as a leader, you need to have a vision of where your 'puck' (your business) is going to need to be. Investing in smart, strategic growth means that you'll be able to take the right shots for the long term. Be that creating a lifestyle, a legacy or making a great exit.
1) Because your employees need career growth. If you can't offer this, they will look for more exciting career opportunities elsewhere.
2) Because your clients need a reliable business partner. You need to keep your business alive for a long long time (if not forever). Anything that stops growing starts dying, this is true also in business.
As a first time entrepreneur, I have had a lot of struggles and oftentimes I have asked myself why shouldn't I just close down the business and go back to the comfort of working as an employee. The same answer comes up every time: Because our clients need our service and because my employees need their jobs. Growing is the only way we can solve our present struggles and ensure the continuity of the business.
Growth allows you to compete and create new solutions/products
Businesses inevitably confront this business growth dilemma sometime. Do we keep growing or not? Some, especially smaller companies, wonder if they can just establish a steady state and manage the business at a level that sustains their lifestyle.
- The reason they can't is that a ‘steady state’ isn’t practical today because business is such a complex evolving system of new technologies, productivity changes, maturing markets, changing economies and new competition over time that businesses are changing continuously.
- To remain successful businesses must understand all the forces acting on them and constantly adapt, refine and change – they ‘grow’ and keep ‘growing’ or they get into trouble soon enough. As Clayton Christensen put it, “One of the most consistent patterns in business is the failure of leading companies to stay at the top of their industries when technologies or markets change.”
- Another reason to grow is to increase the valuation of the business if you want the option of an exit at some point. The bigger and more profitable it is and the more potential it has for future growth, the greater the value.
In conclusion, growth is essential for businesses to survive, prosper and increase in value.
Grow to retain top employees. With growth comes revenue and opportunities for all.
It has to grow to survive, it has to innovate because there is always competition that is doing the same and so if you don't grow and stay ideal, then you could lose your business or become unprofitable.
I'll give you three:
1) Inflation. If you stay static, you're losing ground.
2) Competition. If you're not growing, someone else is probably going to destroy your distinctive competence.
3) Churn. You will lose customers. It's a better hedge to be trying to grow than trying to stay static.
And a counter-example:
Lifestyle businesses are just fine for the proprietor. If you are making enough money and you have time for other things you love, why should you listen to a bunch of people who say you're wrong for not growing?
Because while "growth" is commonly defined as "the process of increasing in size", it also means "the process of developing or maturing physically, mentally, or spiritually"...which means that a business MUST grow, if not in size or profitability, at least in understanding and the application of said understanding in servicing the needs of the market...b/c the moment you fail to do that, you begin the inevitable decline into obscurity.