Life is a series of challenges, and nowhere is this truer than in the world of business. It is our character that shapes and is shaped by the way we rise to meet those challenges – or let them overtake us. Whether we let the frustration discourage or even kill our efforts, or welcome each challenge with enthusiasm as just another way to prove our mettle. This is a lesson that entrepreneurs know better than perhaps anyone.
Starting a business is a risky endeavor – most ultimately fail. The odds against even modest success are extremely long – modest success being achieved when a founder recoups their initial investment from getting a company started. The chances that a business will ever get off the ground and grow to a point where it can sustain its founder(s) and required staff are even more daunting.
While it can be frustrating to fail in getting a business started, it can be even more so to have started a business and grown it to a point of sustainability, only to have the company’s growth plateau. To have worked long nights and weekends, sacrificed time, comfort and resources, pushed and strived to get a business to a point where it can stand on its own, only to have it stagnate, can be demoralizing. What, then, can we do when a business grows to a certain point and seems unwilling – against all our wishes and our best efforts – to grow further?
Put another way, how can we bring about second-stage growth? How best to grow a small, stagnating business into the enterprise that we dreamed?
1. Right-size expenses, but understand the implications of doing so.
First, understand that right-sizing does not necessarily mean reducing, although this is typically the case. Cutting expenses is never, repeat never, going to be a direct catalyst for new growth. It doesn’t increase sales, build new product lines, develop new add-on services, bring valuable new perspective to your corporate team, or conceive a bold new strategic partnership.
What this critical step does do is make growth easier in the intermediate term. It encourages looking for administrative functions that can be cut, it frees up resources for future investment in development of new technology or products, and, most importantly, it gets the leader(s) of a business who are stuck firmly in a rut to free their thinking from whatever got them there in the first place.
On the other side of the coin, “right-sizing” in the case of your business may actually mean spending more. This is why the question requires careful study. Perhaps you haven’t invested sufficient funds in research and development of new products or the improvement of existing lines. Maybe you have resisted hiring additional staff that could reduce the workload of your most valuable, innovative employees. This is why the key is to right-size, and not necessarily to down-size.
2. Explore and pursue new lines of revenue.
When a business seems to have grown to a point past which it can no longer easily expand, it becomes critical to look for new ways to make money. Look for ancillary services, add-ons, or other tangential lines of business that your company can easily enter.
The goal here is to create new profit centers than can help to reinvest in the future growth of your core business. Think about the knowledge and expertise that you employ each day in your core business activities, and think about other ways you could apply that knowledge. Think about what types of businesses or individuals would derive value if they had access to your knowledge or skills without having to bear the cost of hiring someone full-time.
The second part of this point, though, is the actual pursuit of some new goal. It’s not enough just to look for opportunities. Obviously, we don’t want to jump at every possibility we find, but at the end of the day if we want to spur growth in our business we have to do something. Once all the exploring and listing and vetting is done, you have to pick something and try it if you want to grow to the next level.
Alternatively, this step may prove that your business has grown as large as it can without pushing the boundaries of your comfort zone. It can be difficult getting outside the box. If every new opportunity you explore makes your stomach turn and causes you to lose sleep at night, maybe it’s worth asking if you aren’t more comfortable with your business at its current level. After all, leading a large enterprise comes with a new set of demands, headaches, stresses, and sacrifices. It’s not for everybody – a fact that’s better recognized and accepted early-on.
3. Think about vertically integrating your business.
Consolidate your value chain. This means trying to gain control over – and profit from – more facets of each transaction you have with clients. Look for ways that you could make more money from each of your company’s clients without necessarily charging them more money.
For instance, if your company sells some kind of tangible item, maybe you want to explore ways you could get involved with the distribution of that item. Maybe there are even opportunities to start manufacturing items or parts yourself. If you are providing consulting services, don’t just think about what other types of clients might be interested in your services (but do think about that as well). Think about what other types of complementary services might be suitable for your clients.
Are there segments of the market that you haven’t been able to go after just because you need one or two add-on services? Are there other services that your clients might think are easier for you to perform rather than having to find and vet a new vendor, or teach someone else their business?
4. Identify the problem people.
All too often, in situations where a small business has stagnated or is failing, the real problem comes down to one or more toxic people. If no solutions to the problem of resuming growth in your business can be found after going through the preceding exercises, take a long hard look at the people involved with your business including staff, vendors, clients, and advisors. Then, take a long hard look in the mirror.
If you can’t climb out of your rut using any of the previous suggestions, it’s likely that someone is toxic for your business’s future growth. It may be that they’re stuck in the way they’ve always done things; or that they can’t pull themselves out of their comfort zone. Perhaps subconsciously they’re comfortable with the way things are and happy to rest on their laurels and perform their work the way it is.
All too often, though, the problem will be you. Think long and hard about why your business is in the state it’s in. Are there opportunities you’ve noticed but ignored? Perhaps you feel sapped of energy after putting in the effort to grow your business to this point. Maybe you doubt your abilities to lead a larger, more complex organization. Are you up for the challenge, or would you prefer to enjoy the business you’ve built and dedicate time to other areas or your life or causes you care about?
Getting a business that has plateaued to resume growth is no easy task. Organic growth can only take a company so far. Eventually, founders and executives must necessarily step outside their comfort zone and look for new and innovative ways to grow their bottom line. In many cases, there are reasons – often unknown before further introspection – that a company has grown to a certain point and no further. In thinking about ways to take a company to the next level, it’s first important to think about what that next level looks like – taking into consideration the good and the bad – to determine whether it’s really where you want to be.
If, after whatever soul-searching you submit yourself to, you decide that getting your business back on track for growth is the path you want to pursue, the above steps are among the quickest ways, regardless of your industry, to prepare your company for that new growth and to explore avenues to bring it about. No one will do it for you, and even after much sacrifice and effort you may find yourself with little improvement.
Hopefully, though, at a minimum you will have reminded yourself of why you’re engaged in the business you are, why you do things the way you do, and how your customers benefit from the service you provide. You may not think this satisfaction is equal to the success of growing a massive enterprise, but remember that the joy is in the journey, not the arrival.