Scott sat alone at his desk, thinking about the events of the past week. For the past seven years, he and his brother John had shared an office managing the compressor business their father had founded. John had done a great job in running the operating side of the business, while Scott had focused on sales and service. But one issue had really started to claim their attention: how much business growth they should seek.
Growth Versus Risk
Although the business was profitable, and their families lived quite comfortably, the tension
between Scott and John had grown in he past few years. Scott was impatient; he saw opportunities for business growth by adding new customers and new products; possibly even to export. John was content; he didn’t want to kill the golden goose that supported them both.
John suddenly decided to step down from active management due to health concerns, and had turned the reins over to Scott. Although John would still be a minority shareholder, Scott finally could pursue the business growth he envisioned. But, sitting alone on quiet evening, he wondered what he should do. The decision to grow was not as clear as Scott anticipated.
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Business Growth Challenges Defined: You May Be In No Man's Land
The Case For Growth
Scott drew a line down the middle of his legal pad, and began to list the advantages of growing the business, perhaps doubling revenues in the next five years. The advantages came easily:
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Higher profits and cash flow would provide greater income to himself and the family shareholders
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Greater cash flow would allow him to invest in new equipment to improve product quality and reduce production costs
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Business growth would allow him to create more opportunities for his people, and to pay higher bonuses. He could attract and retain more energetic employees with new skills
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When the time came to sell the company, higher profits and higher growth would produce a much higher valuation; perhaps enough to build his dream home by the golf course
Competing With The “Big Boys”
Another thought occurred to Scott as he looked at his list of reasons to go for business growth. It seemed to come as much from his gut as from rational thinking. Sure, he thought, he occasionally envied his friends who have good, relatively secure jobs with large companies. But what does he really like about being in business for himself? Part of it has always been his competitiveness, even cockiness. Scott enjoyed the “hunt”, the satisfaction of overcoming customer skepticism and objections to win a big order; especially at the expense of larger competitors.
“Becoming a larger company would put us in the big leagues,” he thought. “We’ll be able to afford the tools and the talent to compete –and win--against even bigger companies. We’ll innovate in ways we haven’t before; we’ll make people in our industry who have never given us a second thought sit up and take notice of us”.
We’ll look at the other side of the argument that emerging growth companies face as they consider whether to grow out of No Man’s Land—i.e. the case to remain small.
What business growth challenges are you experiencing? Share your thoughts with us below, and don't forget to download our free guide "Business Growth Challenges Defined: You May Be In No Man's Land."
This post was originally published in August, 2012 and has been updated. We believe it remains relevant to the challenges that our blog readers face.
