Tool Box
Issue No. 23 - June/Nuly 2005
Going for growth
by John Doughty
Most people (conservatively) will advise entrepreneurs/business owners against growth because it is risky and if the growth is too fast, one may loose control of a business. If the entrepreneur/business owner has spent many years building a business they may also put at risk what they have worked so hard to build, so be wary of growth. This advice goes against what is required in the market i.e. that you grow or die!
There are a great number of businesses in South Australia doing just fine. They have reached a nice level of output and they know their expenses are covered and they can rely on a dividend from their profits. They have customers with whom they regularly interact and who have been paying for the delivery of a solid product/service. Life is good!
Two such businesses just had a rude awakening.
In business A, the owner, who was a technician, did not realise that their regular customer base was drifting away until they realised that they weren't as busy as usual. They had relied on word of mouth for sales and would occasionally get a slow period. This time the slow period dragged on and they became concerned about covering their next bill.
The owner had been working so hard in their business that they had failed to notice anything happening to their market requiring any different actions from them.
In business B, the owner had had an easy (relatively) 10-year run that suddenly was threatened their major customer slowed its payment schedule. This customer had paid regularly for 10 years and enabled a reasonable business to be built on that basis. The business owner had not got around to expanding their customer base as they were focussed on delivering a great service to their biggest customer. Business continuation was threatened by the change in payment circumstances.
Both these businesses demonstrate the risk associated with not growing or not seeking to grow continuously. You may know of a business that has conso...
