Magazine article Management Today

Don't You Believe It ... Growth Is Good

Magazine article Management Today

Don't You Believe It ... Growth Is Good

Article excerpt

Once economic conditions allow, the urge to expand will be intense Beware: growth is often the last way to improve your business. Here's why ...

Growth can dilute quality and disperse efforts. Sometimes, it happens this way: you start a line of business and enjoy early success, but the going gets tough. Rather than persevere and push the business to its full potential, you start again with some other line. This happened to a consultancy I know - by the time it had reached turnover of pounds 3m it was in four different businesses, while some of its competitors were doing pounds 15m in just one (the most attractive). Soon, the whole mess becomes unmanageable and collapses under its own complexity.

You may grow the wrong part of the business. All firms have some highly profitable customers or products, and others that barely break even. Few businesses can tell which are which. Sod's law guarantees that you will focus on growing the least profitable elements.

Pressure to grow can lead to ill-considered acquisitions. …

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