Every business owner starts a business with one goal in mind––to succeed. But it doesn’t always happen the way we want. There are always ups and downs and we usually sustain several hardships before we can board the success train. Despite continued efforts to grow the business, owners often experience sluggish growth.
Have you ever felt your business is stuck? That it isn’t moving forward? This is one of the common complaints I often hear from the business owners. In this post, we will examine a few reasons why small businesses stop growing.
Lack of a growth goal can lead the company nowhere. According to Jackie Nagel of Synnovatia, “When asked about business growth goals, entrepreneurs respond in a variety of ways, including ‘do better than we did last year’ or ‘double what we did last year.’ This seemingly unplanned, off the cuff response doesn’t come from a casual attitude about business growth, but rather from not having a foundation from which to set realistic, strategic growth goals.”
Sean P., owner of a party rental business says, “Growth rate is something I track very closely. I’m fortunate to have software that manages all my statistics. In my second year (2014) in business we grew 150.7% and let me tell you it was a crazy year! I worked some weeks over 100 hours barely able to sleep and spread so thin I had a hard time trying to stay organized. I had to turn customers away due to not having the equipment or manpower to meet demand. Although it’s a good problem to have, it takes its toll and can break you if you’re not prepared mentally. Since then, I purchased several new pieces of equipment with my profits, and am only weeks away from hopefully securing an SBA loan to add even more equipment, a bigger warehouse more staff. Also, an important reason to keep track of growth. Is when you need a business loan the paperwork is tremendous. So, having my key indicators documented saves me time and helps with the approval. My goal is 50% growth this season, but I’ll have capacity for over 100% if the loan works out. How I achieved this level of growth was internet marketing, word of mouth, social media and retention from year prior. And by studying my competitors’ mistakes and capitalizing on them. I’m a visionary and I can see my business at its peak and what that will look like in 3 years. Hopefully it works out as planned and I will have the freedom and lifestyle I always envisioned.”
There you have it. For any business, it’s important to track growth rate.
Strategy is a high-level plan for achieving goals under conditions of uncertainty. Without a coherent strategy, your company lacks the focus needed to achieve crucial goals and for formulating plans that will move the company forward.
A business owner cannot forget the 2008 great recession. The small business failure rate among self-employed business owners during that stressful time was well above normal with an additional 12% of businesses shuttered in 2009. While many businesses failed, there were some businesses that weathered the recession and truly thrived as the economy improved.
We all know the devastating effects of 2020’s global pandemic and it has yet to be accurately measured. Suffice it to say that it is challenging and unprecedented .Smart executives know that good times don’t last and are continually anticipating the next moves to make when faced with the inevitable downturn. They also know that bad times don’t last, either and position themselves to take full advantage of economic upswings.
If there’s no strategy you will be hard pressed to withstand unexpected economic conditions or opportunities.
Failure to Delegate
It takes money to make money. It is often necessary to cut expenses to avoid cash flow problems. While penny-pinching is often seen as a good habit, you do have to invest where it’s required. First of all, you cannot sacrifice quality because it’s the priority of any business. If you compromise with the quality to reduce the expenses, then it’ll pave the way to the downfall of your carefully built company. Don’t hold back in hiring staff when you know you need an extra workforce to satisfy customer requirements.
Some business owners think it’s best for them to do it all alone. But they fail to realize that isn’t sustainable over the long haul. Sooner or later you’re going to need help. Adding talented members who can contribute to your business will only add to the value of your business and increase the amount of time available for fun, family and working on the business instead of just in the business.
Ignoring Warning Signs
Sitting back and being satisfied with the status quo can be disastrous. As soon as you get complacent and take your foot off the gas pedal, something negative could happen, such as your flagship product becoming obsolete or a competitor stealing your market share. Here are some of the warning signs that often go overlooked until it’s too late:
- Your vision for growth is not clear. You don’t have a concrete goal for changing or improving your business.
- You don’t regularly analyze your business, competitions, customers, environment and the factors affecting your business.
- You repeat the same process and actions at your business every single day.
- There is no financial growth. The P&L statements are the same.
- There is no consistent flow of customers.
- Your website is outdated.
- You haven’t introduced any new products or services.
- The demand for your existing products has reduced.
Continued growth is the lifeblood of small business. “The key to avoiding a slowdown is beginning a new period of growth before you reach that inevitable plateau,” Moll says. “Your business won’t max out at a certain level if you build in the capability to reinvent and innovate,” he explains. “Most of the time, this will require a new strategic plan, a new process and often new, if not redirected, employees who stay observant regarding any changes. It may also mean getting a fresh, outside perspective.”
To grow your business intelligently, contact us.