See if you can relate to this analogy when it comes to your business' growth rate...
More than a decade ago, we planted a few dogwood trees in our yard. Though they are beautiful and we knew they’d be slow growers, today most of them are only marginally-taller than they were when we put them in the ground…
On the way to one of our hiking trails, we often pass a place where kudzu was obviously planted to quickly fill in a large area that had been exposed with the development of a mountain-top road passage. Now taking over just about everything in its path, its growth is out of control...
Consider the Middle Ground
For small businesses, a growth rate somewhere in between is often better.
It’s been pretty boring to “watch” our dogwoods “grow.” Monitoring almost no growth over such a long period is pretty dull. Not much new. No excitement. Same old same old. It’s just that the trees are beautiful, especially in season, even though they aren’t rapidly changing.
Same things can happen in business!
Conversely, it’s exciting to watch something move and change as quickly as a kudzu vine. Of course, that’s until you notice how its rapid and invasive growth is taking over everything around it and sapping the strength from or killing off other things that supports it.
Same things can happen in business!
What about your business?
Is it more like dogwood? Or a kudzu? Or something in between?
There is no one set prescription rate of growth that works for all businesses. And your drive, values, age, abilities, and opportunities will all play a role in the pace of growth for your business. So, let me give you some observations and thoughts on what you may want to target as your business’ growth pace for the year ahead…
Kudzu can grow up to one foot per day and sixty feet per season. So, rapid kudzu-like growth is usually best when it is essential to your success to get to a certain larger size ASAP. This is particularly true in industries or opportunities where the first one there “wins it all.”
Whether that applies to you and your business, you’ll have to judge. But if you conclude it does apply to your business, before you “take off” growing be sure to find ample sources of capital to fund your business’ rapid growth.
If it’s important that your business grows rapidly, and it requires investments in things like trucks and facilities, in most cases you’ll need external capital – either in the form of borrowings or investment capital.
Dogwoods are a slow-growing but beautiful species. The beauty of a dogwood, in full flower, is far and away superior to the untamed and often-unsightly kudzu vine.
Typically, in business dogwood-like growth is ideal in cases where much growth has already occurred, maturity has been reached, and a beautiful (sustainably-profitable) business model is in place.
Who would not want to sustain and preserve the beauty of a dogwood in its prime? Likewise, who would not want to sustain and preserve a well-developed and profitable business?
Dogwood-paced growth is best for such businesses. Not too fast to mess up the beauty. Yet, not no growth or negative growth either. Enough to keep up with the growth of the economy, prices in general, and to continue producing new life.
For most other businesses, somewhere in between is often the right fit pace. You’ll know you’ve got an in-between pace of growth if your business:
- Is growing faster than the pace of the general economy or inflation
- Not growing so fast as to kill or scare off your best staff members, exceed your access to borrowings or investment capital, or deprive you of your draw
- Is building a structure (business model) that will produce beautiful returns for years and years
- Is not untamed and invading its way into each and every opportunity it encounters, whether or not it fits or makes sense to be pursued
If you need help evaluating your business model, we’ve got a free five-minute test here to make the process easy on you. And, if you need help evaluating growth opportunities or planning your business growth contact us here, we’re here to help if you need it.
Long live small business! Long live small business owners!
Jim Smith, Founder, PERFORMIDABLE, LLC