David Birch points out that just one in three Inc. 500 companies is able to keep growing fast enough to make the list for two years running. Like many other statistics of failure of small and mid-size companies, this is another scary one. The problems are known to all: growth pains, lack of access to capital to fund growth, competition from 800-pound gorillas who want to see them dead, and management's capability to grow from a startup to sustenance phase (Related article: From a startup to sustenance phase - Ed Zander's views).
iProceed's recommendations on what can firms do to balance growth with their capability for long-term survival
iProceed's recommendations on what can firms do to balance growth with their capability for long-term survival
- If possible (particularly if you are privately owned or have a smart group of investors), agree on an optimum level of growth and stick to it. Yes, you may miss some opportunities for value creation but it is best to grow at a pace that you can keep your customers, employees, and shareholders happy in the long run rather than increase the top line in the short run.
- Another way to maintain an optimum level of growth is to use your own free cash flow for growth rather than borrowing or raising capital from investors. This approach will allow you to develop a strong financial base to grow from rather than using other people's money to fund unrestricted growth.
- At some point, talent runs out in any organization. Entrepreneurs may be great at coming up new ideas and taking it to the next level but may not be able to provide the leadership needed when you have reached a certain size. At that point, focus on what you do best and get a team of people on-board to take on other tasks.
Recommended link: iProceed Growth Knowledge Bank