Sunday, November 4, 2012

Small and Steadfast

Rapid growth is often the ultimate goal that businesses aim for, yet, when it arrives the sudden surge can cause a company to struggle or even fail. When a business experiences suddenly success, the entrepreneur is typically operating with limited resources including a lack of capital, lack of management skills, lack of information about what may be propelling the recent growth, poor procedures, lack of a go-forward plan, lack of experience with change management and larger operations, not being able to identify risks, and – nothing new here – lack of time to deal with new issues.


Dramatic increases in sales can also come with dramatic increases in expenditures, bad debt, whittling of profit margin and other distasteful characteristics. Simply put, growth without profit leads to cash shortages and unpaid bills.

To avoid the perils of expansion, your objective should be to find a certain market niche and devise a business plan that propels your business ahead with a healthy and steady growth. Focus on:

• maintaining an appropriate profit margin

• analyzing key performance indicators

• building assets

• controlling debt

• managing cash flow

• standardizing operations

• developing leadership skills

Over-expansion is a leading cause of business failure; be proud of being small for now. Beware repressing growth though, since that means you’re missing opportunities. Establishing high growth as your only measure of success can lead to reckless decisions. Instead, develop a definition of success that includes steadfastness and lifestyle factors. Then, let your success lead you, rather than you forcing it.

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