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Managing Your Business Growth

Growing too Fast can Lead to Being One of the Many Business Failure Statistics

Is business growth always good? Business failure statistics prove that not all growth is good. Business growth statistics (and online business statistics) are key performance measurement indicators.

Growth is good as long as you are capable of managing it. So why do all businesses chase growth?

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Understanding the strategies of growing your business successfully is the first step.

The second step in growing your business is to ensure that you build a plan that takes you in the direction you want to go (rather than going down a path or direction that you are 'pushed' into through the market and/or environment that your business operates in.

Keeping your focus on your strategic business plan will enable you to be more successful at the management of your plan (and your business).

Define Business Strategies to Consider:

Let's define what business strategies your small business might want to use:

  1. Organic growth is best described as growth that is achieved through internal efforts and that results in increased sales, profits and business metrics. (To recognize your improvements in these areas you need to measure business performance, track areas of strength and weaknesses, and plan for continuous improvement.)
  2. Inorganic growth is growth through mergers (such as horizontal or vertical mergers), acquisitions and take-overs, in other words growing through activities external to the company. Inorganic growth can be a faster, although often a more expensive, route to growth. Growing inorganically is most effectively used if your business needs to quickly enter a new market or 'buy' an accelerated product development or market position.

Fast expansion is not always a good thing, even though most businesses want it (be careful what you wish for).

Particularly if growing is too challenging from a manageability perspective. (Don't become one of the large number of business failure statistics.) No matter what type of growth you choose, make sure that your strategic business plan addresses expansion challenges and opportunities by choosing from a selection of effective decision making tips and problem solving techniques.

For example, if acquiring, merging or being taken-over, your strategic plan will need to address significant change issues and cultural issues. Which employees go; which stay? What systems and practices are kept; what are blended?

Can a Fast Growing Business
Keep Pace with its Growth?

Benchmarking with industry-related businesses is a good way to see if your growth is heading in the right direction; often you can find the information you need from online business statistics and resources available through industry associations.

You will need to focus on decisions to be made that will sustain your business while it grows. These are just a few:

  • Hiring and training staff. Having enough staff for the peaks, as well as the valleys.
  • Having productive equipment to handle increased volume (no down time allowed).
  • Having enough incoming phone lines (and people to answer them).
  • What's the right inventory level for a fast growing business?
  • What's the right amount of cash to fund your fast growth (as well as enough cash to fund necessary capital investments)? And more.

Businesses that grow organically are a good measure of the health of the existing business and are a good measure of how well the business is managed. Organic growth requires using your strategic plan checklist to build a strategic business plan, and through the use of strategic tactics and action plans you will develop excellent execution outcomes.

From a small business perspective, owners often feel that growth is good and fast growth is even better.

Growth needs to be Continuous and Sustainable.

Too much growth, too fast can cripple your company. Your company's growth rather than customer satisfaction becomes the focus. Your organization's culture often can't grow as quickly as sales or profits or increased staff grows.

Effective leaders recognize that sustainable business growth requires a strong management focus that is aligned with the small business plan and goals.

Don't be diverted from your business goals by "fast and easy" growth; all growth will cost you something and for a small business that cost might be more than you can afford. This is particularly true when opening a small business (the startup stage). Plan your growth strategy to fit your business today and into the future; and to fit your business life cycle.

From a management perspective, a company with five employees is a whole lot different than a company with 20 or 30 employees. When do you start building policies, practices, job descriptions, organizational structure, and measuring and comparing industry and online business statistics? And how do you build growth strategies into the organization's strategy?

Depending on your business and your plans for the future, either organic or inorganic (or both) growth can be good operating models. However make sure that you plan for your development.

Do not operate in an environment or organization where growth is happening TO you and all you can do is react, rather than manage it.

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Feedback from Site Visitors:

Hello. I am a professor teaching Human Resources Management. You have an excellent page on writing business value statements entitled your "Value Statement: Develop a Definition of Values in Your Business". I would like to use this page (giving full credit) to teach my students how to write good business value statements for the HR Strategic Plan they are required to prepare. Thank you. Richard C. Brocato, Ph.D. Professor of Management, Maryland, USA

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