Don’t Just Grow for Growth’s Sake. Have an idea.

Of course, every business proprietor must set their own goals and priorities, but as children learn if they first play video gaming: the player that stands still gets killed first. Running a business, standing still or not growing implies that your competitors are most likely likely to pass you. Usually, companies are either growing or shrinking — standing still hasn’t been just like a good long-term strategy.

It’s important we define the type of growth we’re discussing. While wild and crazy growth isn’t necessary, growing in a few direction is, at least if you would like in which to stay business. There’s “revenue growth” (top line) and “profit growth” (important thing). You may also grow with regards to innovation, technology and new offerings. Frequently I find entrepreneurs who get swept up chasing top-line growth as measured by revenue, but I’ve yet to locate a company that may put revenue in the lender.

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Pure company size hasn’t been an attractive goal if you ask me. As the famous business management advisor, Jim Collins, once said, “Big will not equal great, and great will not equal big.” Rather than getting preoccupied with revenue and size as a determinant of growth, the focus for excellent companies may be the “right growth.” You should pick the metrics that better describe the type of growth that’s right for your company and that may be banked. Profit growth (gross and net profit, pre-tax income, EBITDA, operating profit) and cashflow is really what you need to spotlight. Not employee growth, work place, units sold and other physical measures of size.

There may be something very damaging about an excessive amount of growth. When companies grow dramatically they have to arrange for it in the regions of people, processes and technology. How will the business intelligently put the elements set up to take care of this rapid growth? If you’re a Google that built itself from day someone to grow rapidly with plenty of funding, then it’s a different story, but it’s the rare entrepreneur who plans for and puts the infrastructure set up in advance to intelligently grow a business.

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Many entrepreneurs recognize these limitations and could grow quickly for just two years in a row, however they often have a hiatus for a year to let people and processes “catch up” to the growth pattern. Fast growth may necessitate differing people, skills, processes and technology. A never-ending fast-growth model takes a support model to accomplish it well, which hardly any businesses can navigate.

The right sort of growth is effective. It keeps people improving their skills to grow with business needs. It generates the necessity for new positions, that offer advancement opportunities for employees. It keeps technology systems current so future updates don’t become major efforts. And it forces a company to evolve processes to take care of greater volume and revenues.

Growth is good, but only when it’s the right growth with an idea for the people, process and technology infrastructure to accomplish it intelligently and profitably. Growing for growth’s sake isn’t a wise or necessary business move. Growing to remain competitive is.

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