in General

Fast Growth is the Fast Lane to Failure


You will often hear that successful companies grow their business. It might be true that success includes growth but the opposite isn’t necessarily true. Actually, very often the success of a company ends when its growth starts. This might sound a paradox but if you think a bit, such an outcome is quite logical.

How Will Growth Affect You?

Many companies try to expand fast and beyond control. This leads to nowhere. Additionally, growing your business isn’t always the better option — very often staying small is the most viable alternative because growth can lead to lots of problems.

Fortunately, the recession stops many growth enthusiasts but even when there is no more recession, you still need to think a lot before you decide to grow your business, especially if you plan a huge expansion.

Growth usually leads to some or all of the following problems:

  • Increased costs. When a company grows, this inevitably increases its costs for everything — starting from salaries, rent, materials and so on.
  • Availability of skilled staff. Another problem you will face and you need to think about it in advance is staff. When you grow, you will need more people. Will you be able to recruit the people you need because if you can’t, this can risk your well-being.
  • Can the market take your increased supply? When you grow, you can offer more products/services but will the market respond favorably to that — i.e. will there be sufficient demand for your increased supply? Economy of scale can easily turn into loss of scale and if you have invested a lot in the expansion and you don’t see a return on your investment, this can shake you pretty badly.
  • Who will manage the grown monster? Finally, one more question you need to find the answer to before you expand is if you will be able to manage the grown company. Managing a small business is very different from managing a large enterprise — in a sense, if you can drive a car, this doesn’t mean you can drive a truck, right? Most likely you will hire professional managers but if you at present don’t have them at your disposal are you sure you will be able to find what you need when you need it?

Keep Growth Under Control

If you have decided that a growth is good idea for your company, the next step is to create a detailed plan how to do it. Unplanned growth can lead to many problems.

You should always bear in mind that it is safest to grow slowly. Rushing to have things done is never the best way to do things and company growth isn’t an exception.