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Should You Grow Your Business?

Should You Grow Your Business?

If running a business were like driving along a one-way street, there would probably be far fewer entrepreneurs interested in taking the journey. The path business owners take is often far more varied and uncertain. Some companies get started out of someone’s house and later become a multinational

If running a business were like driving along a one-way street, there would probably be far fewer entrepreneurs interested in taking the journey.

The path business owners take is often far more varied and uncertain. Some companies get started out of someone’s house and later become a multinational entity. Others manage to launch with multiple locations at the outset, and later expand into new markets with additional stores or branch offices.

It’s easy to assume that “success” and “growth” are so inextricably linked that they could be almost synonymous. What kind of entrepreneur would start a business they had no intention of scaling to become the largest in its industry?

This way of thinking can put a lot of pressure on founders and heads of companies, because it implies that no amount of growth is ever good enough. For some firms, though, reaching a certain plateau might be the best possible outcome.

Not every small or medium-sized business is like a retail chain that needs to continue scouring for untapped markets where it could compete with its rivals. That kind of growth involves significant capital expenditure for offices and equipment, and ongoing costs in terms of payroll for new hires.

This is different from growing your revenues, which doesn’t always involve adding staff, real estate or even a lot of other customers. Blindly chasing “growth” for the sake of it could even be dangerous if what you’re spending to look bigger outpaces the cash you’re actually bringing in the door.

While it may take time for business leaders to realize how big they need to be, it’s a good idea to consider this question early on. That way, you’ll be able to refine your business plan and allocate your financial and other resources accordingly.

Some of the considerations for growing or not might be best explored by thinking through a subset of questions, including the following:

How niche is the market you’re serving?

When you’re selling a consumer product like hats or books, there might be millions of potential customers who would be interested in getting to know your brand. In that case, growing operations to serve an ever-increasing demand makes sense.

There are a lot of product and service categories, however, where the total addressable market may be surprisingly small.

In the business-to-business (B2B) sector, for instance, a company might emerge that develops applications that are aimed at the world’s largest banks. There might be only a handful of financial institutions that represent a true fit for the company’s products.

Other examples include companies serving large government agencies, utility companies or niches within niches, such as an automotive component manufacturer.

You can always grow your revenue or share of wallet with these customers, but you may not need to grow in other aspects.

How intimate is the customer experience you’re offering?

A quick-service restaurant calls its product “fast food” for a reason: you make money by serving meals like hamburgers and fries as quickly as possible. People approach the counter, place their order, get handed their food and leave.

There’s lots you can do to enhance that kind of customer experience, but it’s not what management experts would necessarily call a “high touch” one.

In other kinds of businesses, though, customers might require a significant amount of up-front time for consultation before they buy a product or invest in a service. They may require ongoing attention and support that comes through a very direct, one-on-one-relationship with the business.

In that case, the number of customers you can serve without degrading the experience could be few. That’s okay, though, because those customers might pay a premium for the quality and depth of the experience you’re offering.

How digitized is your overall portfolio and operations?

Producing almost any kind of physical product, whether it’s basketballs or airplanes, usually requires a lot of physical resources. This could include people, machinery or both.

The rise of the digital economy introduced an entirely different paradigm for entrepreneurs. It’s now possible to sell online and have areas like fulfillment taken care of by a third-party service. You don’t necessarily need to have any stores at all.

So many forms of content, meanwhile, have been digitized and made available without requiring a physical item to be purchased. While you can still set up a physical bookstore, you can also offer nothing but eBooks. A few record shops remain that sell vinyl, but much of the world has moved to music that is delivered as digital files or simply streamed.

A company that offers mobile apps or other downloadable assets may have a very different set of needs than companies whose products are primarily sold through shopping malls or grocery stores. They can still sell in large volumes, potentially, but without a giant workforce behind the scenes.

Can you market, sell and service like a big company without becoming one?

Just as companies can sell digital goods and services, they can also make use of digital tools that make them competitive with much larger firms.

A CRM, for example, can allow a company to comfortably grow revenues by finding high-value customers rather than growing its sales team. Marketing automation can do the work that once required dozens of people and several external agencies.

Now that customer service tools are available through the cloud, even small businesses can help large numbers of customers without a lot of agents. They can turn to self-service tools, customer communities and chatbots instead.

There’s nothing wrong with being a company that doesn’t pursue growth, but which focuses on providing the best possible value to its customer base instead.

Own your niche.

Take pride in a highly bespoke customer experience.

Enjoy the benefits of acting as a digital-first company, or using digital technology to keep pace with industry giants.

You can still take your company far — but it will be on the path that’s best for you.

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