For many businesses, growth is a core objective. Achieving bigger sales, higher profits and greater geographical coverage all help your business generate greater income for shareholders and employees. However, some businesses may need to limit, or stop entirely, their growth, if it is not in their best interest.
Reasons for limiting business growth
There are several reasons why you may want to control your business growth. You may, for example, grow too large too quickly which can expose you to the risk of overtrading.
Planning is the key to dealing with problems arising from business expansion. You need to invest time to prepare a business plan for growth and ensure that it is continually updated.
You may have an exit strategy in place and your business expansion plans should support this, not conflict with it. Use key performance indicators (KPIs) to assess business performance and include these in your planning to help show that you are hitting your targets. Do not be afraid to change strategies if you fail to meet your objectives or to stop when you do. See how to measure performance and set targets.
If you decide to stop growing
If you identify serious problems resulting from your business growth and feel that you cannot deal with them effectively while continuing the expansion, you need to take action. Do not avoid putting off the decision, because it may only make the problems worse. Stopping or reversing growth isn't an indication of failure on your part.
If you stop your business' growth and successfully consolidate, it is important to ensure that you learn from the experience before starting further expansion. You should:
- identify the factors that caused problems
- put strategies in place to prevent or tackle problems in the future
You should also use the expertise, facilities and funding that you have gathered in your business so far as the basis for the next stage of business development.