Why do businesses need to grow?

Building a profitable & sustainable company

It seems straight forward when we think of growth in this way, but in reality, there is much more to achieving growth and sustaining it over time. Companies can grow in some areas but not in others. For example, revenue can grow without an increase in clients if the gains are due to existing clients buying or paying more. It’s even possible for one area to increase and another to decline; if more sales are achieved but the prices are lowered then this could result in the business’s overall revenue being down. This means that defining growth can be difficult; and without understanding what the right areas to focus on are, businesses can fall into traps where they think they are growing but not in the ways they would like to.

We know that there is no universal formula for business growth since each company is made of its own unique systems.

It’s only the business owner who determines growth factors, and business growth should be an A-list objective of the company. Business owners should look at their business goals to recognize the areas they want to focus on to achieve growth. Managing growth effectively is essential to ensure that a business can sustain and build upon its success in the long term. This involves strategic planning, careful financial management, and a focus on maintaining customer satisfaction and operational efficiency.

Without expanding and growing, a business stagnates and deteriorates.

How you encourage, prepare, and respond to growth as a business owner will determine if your company continues to grow and how much profit that growth yields. Sometimes growth can cause more headaches, more problems, and actually cause a decline in quality within your organization if you do not have the business tools to deal with it.

Your business is a unique creation that requires an individual approach.

The Service Strategist’s Growth Pillar leads you toward sustainable business growth and shows you ways to grow your company.

It’s important that all companies experience growth. They say that in business that you are either growing or dying. Without it, the business wouldn’t get past the phase of simply existing and more likely, shrinking! Each year a typical trades company will deal with client bleed off, increases in cost for the equipment and materials, increases to wages and overheads. If the organization isn’t growing revenue in line with these costs, then the business is declining. It is hardly possible for a business to remain at the same rate for long as the overheads and inflationary costs will beat the revenue.

To offset this, we need to be prepared as business owners to always be growing. Whether that growth is at a pace to maintain the status quo or to see rapid improvement is up to you, but it must be a factor in your everyday operation. That being said, growth isn’t easy. There are a lot of pitfalls in business growth. There is a theory around plateaus of business growth, which shows very universal levels which a business will typically fall into. These numbers are mostly consistent within 20% above or below. We see business plateaus occurring at these revenue thresholds and beyond:

• $100,000
• $250,000
• $500,000
• $1,000,000
• $2,500,000
• $5,000,000
• $10,000,000
• $20,000,000
• $35,000,000
• $50,000,000
• And beyond……
•  

“You don’t know what you don’t know.”

When you look at a plateau graph, you will notice that prior to moss businesses making the transition to the next stage, they will see a slight increase to their revenue and then they experience a period of turmoil and typically a reduction of revenue and profitability. This is largely due to the unknown. You don’t know what to put in place and you can spend a lot of money and time in a process that doesn’t work. You may find people don’t fit the positions that you need, and you as a leader can be lacking the skills needed to properly manage and direct the new business model.

It’s also essential to recognize and know that the type of growth required depends on the stage of the business. Businesses that are starting out need to grow rapidly in order to establish their position in the market and swiftly get to a size that means that they are not in danger of collapse. It needs to be large enough to bring in enough revenue to cover costs and begin to make a profit.

Mature businesses don’t need to grow quite as fast because they are not exposed to the same levels of risks as small startups. However, growth is still fundamental to their operation. Growth can lead to many benefits too. For example, an increase in profits due to a better sales process could help a medium size business build liquidity to protect against future risk – even if their other metrics (revenue, sales, etc.) remain the same.

Most mature business models level out on one of these plateaus. They grow to a point where they are comfortable, and they stop pushing for the next plateau. They make a decision that moving to the next level will be too difficult.  Imagine if you could span the gap by knowing what to implement for the next level of business? How easy would it be to make the transition?

One thing to keep in mind with the plateaus is that employees rarely if ever stick with a company beyond two plateau transitions. They get complacent to what the business was and become uncomfortable with what it is now.  Most people do not handle change well. As the environment within the organization changes, which it needs to transition, then they will likely move on to find other opportunities.  This can be managed but be prepared for it.

We know that business growth is essential for businesses that are expected to survive and thrive…it is critical and influences the success of any company.

Growth is:

• The catalyst between having a startup, a micro business, a small business, a medium sized business and expanding an organization from any of those points.
• Key to overcoming the plateaus that are associated with businesses at different stages and sizes.