When Business Growth is Bad – Part 3

Posted by Heather Villa, CMA, MBA, MSM on February 13, 2009 in: Business - Plain & Simple, Project Management

I can’t imagine a business that doesn’t want some kind of growth. That’s exactly the way it should be. But not all growth is good and in the past couple of blogs I talk about business growth that can sometimes be a problem.

So far, I’ve talked about out-of-control business growth that costs so much up-front, the business cannot keep up. And, I’ve talked about business growth that spikes (increasing then decreasing) so that the business is stuck with a high bill from the brief burst of business.

And in this blog, I want to talk about yet another problem of business growth that I’ve seen:

Problem 3: The lack of control over the business. When a business grows – whether it’s a sustained increase or a spike, the business owner/director/manager tends to lose control over that business. In some cases, customers “take over” in the sense that they might demand additional efforts which might not normally be granted but which are added because the money is there. In other cases, business partners “take over” because they see the money coming in from a certain market and they want to follow those dollars. In other cases, resellers “take over” because they feel that they are bringing in enough money for the business to make demands on the business. One example I’ve seen is a consultant who was asked by a client to design his website. Business was busy and the consultant should have said no, but the client was generating so much revenue that the consultant couldn’t say no. It didn’t go well and the consultant lost a client and the revenue. And another example I’ve seen is a reseller who earned so much money for a manufacturer that the reseller started demanding price cuts and excessive promotional considerations.

Solution 3: The best thing to do is stick to the business plan. (Uhhh…you have a business plan, right? MAKE SURE YOU HAVE A BUSINESS PLAN…then stick to it). If you’ve done your research and you start the business with the confidence that the plan is going to work then you should be okay (assuming that your research led you in the right direction). Yes, you may need to shift with the market, but that needs to happen carefully and thoughtfully and not “on the fly” based on whoever is sending the most money right now. Your business plan should be your North Star that guides your business. And when you need to change your business plan, you take time to do it carefully.

There are certainly other problems that result from too-fast, unmanaged business growth, but these are three common ones that I see from time to time.

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