Growth can be good and growth can be bad. It depends. Business growth is one of the most talked about subjects in the entrepreneurial world. Unfortunately, much of that talk is based on false beliefs or erroneous assumptions about business growth.
Indeed growth can create value, but, if it is not properly managed, growth can destroy all the effort that was behind. “Growth can destroy value when the amount or pace of growth exceeds managerial capacity, stresses quality controls, stresses financial controls, dilutes one’s customer value proposition, and propels a business into a different competitive space where it will compete against better capitalized, more efficient competition” (Hess, 2012, p. 24). But not always everything is bad. Growth can actually be really good; yet, it depends in large part of a strong business strategy.
Is the business prepared to grow?
When growing bigger, businesses increase their complexity, as a result it requires more bureaucracy, rules, administrative support and information systems, all of which can erode the company’s entrepreneurial soul. By increasing the company size not only come complexity, but also the need for more professional management.
In practice most first-time entrepreneurs find those changes difficult to deal with. Some find them unpleasant. Thinking that growth is just more of the same, is like getting inside a plane and not getting ready for take off , because growth transforms almost everything in a business. This can be better managed if one asks these questions (accurate answers are a key factor): Are we ready to grow? What do we need to do to prepare for growth? How much should we grow? Are the right people, processes and controls in place? What are our risks of growth? How will we manage those risks? What are the early warning signals that we may be growing too much or too quickly?
Growth is much more than strategy
Before taking off, it is necessary to make a plan for the turbulence that growth will bring. In the case growth just happens and you do not have a plan, it is recommended to decelerate your growth in order to give your business time to breathe. Remember that people, processes, and controls need to catch up. “People are like engines—they can only accommodate so much stress without a breakdown in quality or performance. Just like one can not continuously “red-line” an engine, one cannot continuously “red-line” an entrepreneurial business” (Charlottesville, 2011,p. 16).
Success requires a combination of excellence and constant improvement in the operations; this can only be achieved over time through adjustments during the process. Success also requires refocusing the business with its customers, remember, most businesses are people doing business with people, do not forget to listen to them.
Is the organization prepared to grow?
The skills and processes needed to start a business are totally different from those to grow a business. The managerial skills play an important role in the process of getting the organization ready to grow. Entrepreneurs need to learn not to underestimate the power of culture because this could influence when trying to build a growth-management team.
Why is focusing on people so important? Because in most cases it takes people to grow a business, and growth requires an entrepreneur to delegate and trust others to help in the process. What you do not need is having resistance to change; paying attention to the human capital is always a plus. One effective way to take care of your personnel is by creating and maintaining motivation and commitment. To reinforce those aspects it is necessary to maintain a smooth communication with the employees through the internal culture, leadership behaviors, measurements and rewards (financial and emotional).
So when choosing between ‘growing or dying’, you must realize that the company could actually die while trying.