The Truth About Growth

February 28, 2023 – Originally published on Linkedin here

Unrealistic growth targets kill businesses.

This isn’t my opinion. It’s well documented that most companies don’t exhibit rapid growth. In most cases if they experience rapid growth they don’t sustain it for long.

Taken in aggregate the top quartile of businesses grow. The next two quarters hardly grow and the last quarter shows slow decline.

The data also shows that whose who pursue unrealistic growth goals without a sound plan actually damage their performance. In fact this is frequently a major factor in businesses failure.

So what does it mean to have a sound plan for growth? How do you balance ambition and realism?

You need to have built the muscle before you can perform. If an athlete is out of training and they try to perform they will injure themselves. The same is true of businesses. If our business isn’t ready for growth and we try to run we will damage the business.

Start with a credible answer to the following questions:

1. Where will we grow?

What market do we go after? Are we going to broaden our offering and offer new products and services? Are we going to expand geographically? If we are planning to sell more of the same product or service, what gives us confidence that there is latent demand that we can unlock?

2. How will we grow? 

What resources do we need access to in order to fulfil that growth?  

How will we access them, partnership, internal investment, acquisition or something else?

This means applying the same level of rigour that a CFO demonstrates with money to other aspects of the business. 

NB: Culture is where I have seen several businesses do significant damage to themselves. They try to grow rapidly and destroy the intangible people and culture assets that are the heart of their growth engine.

Only once when we can give credible answers to the above can we estimate how much our business might grow.

The world is changing rapidly, AI, cultural shifts and changes in the funding landscape will create and destroy opportunities.