Should I Keep Pushing For Growth? Or Should I Consolidate?

22nd June 2016

Gavin Preston

Business Growth

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You have pushed hard. Your order book is looking healthier than it has ever done before. Your turnover and profit for recent months have been your best ever. You may be grappling with how you can keep up with the demand of your burgeoning order book. Do you take your ‘foot off the gas’ in terms of continued sales growth in order to consolidate? You may argue you have earned that reprieve.

There are times in the growth life cycle of a business when you need to be careful to ensure that your production/delivery capacity can meet demand; you have access to enough cash to meet supplier payments, payroll and the VAT bill; your customer experience is a good one and that their expectations are not just managed, they are exceeded.

As everyone in your business is dealing with the increased demand some members of your team may be feeling tired, over worked and getting disillusioned. In this situation there is a strong case to pause for breath, to stabilize, to consolidate, even to plateau.

Stabilise yes. Grow yes. Plateau no. In business there is no plateau; you are either growing or dying.

When you are working at capacity to meet demand you do need to ensure that you have the people, the systems, the manufacturing capacity and the cash flow to deliver on that growth and to ensure you do not overtrade. This is essential.

Since my days as a 20 – 21 year old working in the Corporate Recovery/Insolvency department of KPMG I saw all too painfully the results of winning more and more profitable business but without sufficient cash flow to keep the cogs of the business machine turning. In preparation for situations like this author Jim Collins (in his book “Great by Choice”) recommends you accumulate more oxygen tanks, you increase your cash reserves.

So yes you need to grow your capacity, manage the cashflow carefully, be future planning the building of a cash buffer, be developing/growing new product innovations and be improving/growing the customer experience. You are growing in all of those areas. There may be a time when (it is wise) to ease off the gas momentarily on the sales whilst you ensure you can deliver on your promises to the customer. In fact it is better to secure delivery to the customer at a time in the future when you have capacity rather than ease off sales activity.

Please never seek to plateau.

This is a mindset shift which will lead to lower activity, lower pipeline building and when you need the next orders coming through…lower sales. Maintaining high levels of action in terms of innovation, sales and looking after our customers so they feel valued and want to continue to trade with you needs to be at the core of your company culture.

We are at our best when we are growing. It is just at different times in the growth cycle of a business we need to direct our growth focus in different areas.

“Businesses that get ‘small again,’ die. They literally implode upon themselves.”
Michael Gerber, The E Myth Revisited

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