3 Silent Business Growth Killers
There’s an inescapable truth I’ve found over twenty years of working with fast-growth companies: Instead of bringing out the hidden strengths of a business, success tends to bring out the hidden weaknesses.
In other words, as companies grow, they come to certain points where the things that used to work, the things that created success, don’t work anymore.
If not managed correctly, over time, your company’s greatest successes will morph into insurmountable liabilities.
These are three of the most common – and most deadly – growth killers I’ve seen:
1. Too focused on harvesting success.
“Hot” companies often cool off after their initial growth because they are too focused on harvesting their success to launch new growth initiatives. As a result, when the current business slows – as it always does – they’re not prepared to replace it.
Companies that fall into this trap underinvest in new growth opportunities, and overinvest in mature products or businesses. As time goes by, the organization’s original products inevitably will begin to mature and will no longer produce the rate of growth the company needs. Without realizing it, the company falls into mediocrity by losing it’s entrepreneurial drive.
Successful growth companies have a healthy paranoia about success. They never rest on their laurels and are not one-hit wonders. Instead, they are able to continuously repeat the cycle of success to avoid any lags in growth.
Even if you have a vibrant business, if you aren’t executing a strategic plan for locating new growth opportunities while the business is still growing – continued success is in jeopardy.
2. Putting all of the eggs in one basket.
Every business strives to land a marquee customer or two. Having a customer the equivalent of a Target, Whole Foods, or Home Depot in your market means big orders and stable cash flow.
It’s prestigious for you and your company to be associated with an industry giant. And such a customer can give your company instant credibility and open doors to vast new opportunities.
But if the success of your businesses is tied to one or two big customers, you are forced to operate in a vacuum. Slowly, all the energy and resources are sucked up trying to meet the needs of one customer, rather than the needs of a market full of customers. Eventually, you are no longer in control of your company’s destiny – your fortunes rise and fall with one relationship. If your big time customer experiences trouble, they will drag you down right along with them.
If you can’t afford to lose one key customer, then that big customer essentially owns you. It’s a precarious position. When all of your processes, management energy, and resources are devoted to one customer you can’t possibly find opportunities in the rest of the market.
If the majority of your revenue comes from one marquee customer – be prepared for a mighty fall.
3. Stubbornly clinging to the past.
Many companies accelerate their decline simply by holding on to what is familiar and comfortable. In an effort to succeed in today’s world, they seize on yesterday’s answer. A service provider that wants to leverage its core strengths relies on an outdated business model. A once thriving manufacturing company insists on providing a product to a market that no longer exists. A rapidly growing company fails to consider new ways of managing and operating because that’s not what made their company successful in the past.
Too often, companies that have been catapulted into success, tend to develop an air of invincibility. After winning the long battle for market recognition, they inadvertently strengthen the belief that they have found “the” formula for growth and success. Companies like these end up stumbling because they trip over what worked for them in the past.
Long-term sustainable growth requires continuous change and reinvention. You must constantly look for signs your existing business model needs changing, by understanding shifting market conditions, competitive threats, customers’ ever-changing needs, new technologies, and so on.
It’s hard to believe that the very behavior that leads to success at one stage can cause you to fail at the next. But it can, and it will.
No matter how successful your company is today, if you continue to rely on the same methods and approaches that got you to your current level – you won’t have what it takes to get you to the next one.
Are any of these silent growth killers lurking within your business?