Almost every company aspires to or actively looks for growth opportunities. If we were to discourage growth we would be discouraging entrepreneurial spirit, something we ought to be nurturing. However, growth is about using existing products to drive sales, through acquiring new customers or motivating existing customers to buy more, more often. According to author Edward Hess:” Organic growth represents the underlying strength and vitality of the core business.”
Opportunistic growth is a bad idea. Entrepreneurs should be encouraged to take advantage of opportunities they spot – that is true entrepreneurship. However, grabbing every opportunity that arises which may not be part of a carefully mapped-out strategic plan may be foolhardy. This is why I am very critical of the plethora of business that are “trading in all aspects”, companies that supply stationery, cleaning material, groceries, linen to government, have no core business.
Growth for the sake of growth may be unsustainable and carry unforeseen risk. Most businesses require progressive and organic growth. This growth comes through various stages and each business goes through this cycle at different rates. The four basic stages of growth are:
- Gestation period, when concepts are formed and the business starts becoming a reality
- Incubation period, when the fragile enterprise requires much nurturing and support
- Maturation period, development of systems, establishing a strong customer base and skilled personnel
- Stabilisation period, when investment is assets and people become reinforced for long term growth and survival
Investment capital must be managed carefully and according to these stages of growth. Don’t squander revenue, and prepare for setbacks. Keep an emergency fund. Remember, we would never build great companies that transcend generations if we kept jumping certain stages of growth in pursuit of short term profits.