It’s every entrepreneur’s dream to successfully grow their business. Although, some business owners could normally grow their companies instead decide to limit their organization’s growth.
You may have heard of the saying: Grow or Die. Yet many entrepreneurs chose the least popular option. The following are the main reasons why these business owners chose to limit the growth of their companies.
Fear of losing financial stability
If an enterprise is generating enough money for the owner to attain her or his financial goal, many people decide not to incur the additional risk linked with further growth. Since these entrepreneurs already have everything they could want, they are scared to risk their financial stability.
The inability to let go
Let’s say you are a brilliant interior designer. You like to decorate spaces in your own distinct and unique style. You are a master of your craft. However, you can’t or you won’t delegate the decorating to anyone else. You feel that no one can execute the designs as only you can. So, if you continue to insist on decorating interiors all by yourself, the size of your business will stay limited by your own capacity.
In the same way, you are a very successful landscaper. Expanding your business beyond its current size would require you to allow other people to make decisions daily. You would need to implement a level of management between you and your primary staff. You are unwilling to do that. Hence, you have made a deliberate decision not to grow your business.
The time required to attain profitability
Startups may take some time before they can achieve profitability, as their owners improve the business model. Business owners are often advised to make sure that they have a profitable business model before scaling.
If you spend $10 in labor and material to produce a product that you sell for $8, you are not going to make up the difference in quantity. Likewise, if you are a service provider and you routinely deployed workers who cost your business more in wages than the client’s bill rate -- you will soon run out of business. You have to refine your business model first before thinking of growing your company.
Desire to preserve sustainable growth
Some companies require capital to grow. Take into consideration a business that has decreased profit margins, needs considerable inventory and accounts receivable. A dollar of sales growth may well use more money than it gains in the first year. In this situation, the owners are confronted with a decision to either acquire external financing or limit growth to a rate that the company can maintain through its own cash-generating mechanism.
Knowing Your Limits
The key to a successful expansion is to know what your limitations are. This is very specific to you and your company. Before you start to make any crucial decision, plot a worst-case scenario of how much the expansion will cost and how many resources it will expend. Most businesses hope to eventually grow and bring in more profit, reaching more consumers. However, if you grow too quickly it can create disastrous and costly results. It is wise to plan carefully for the day you’ll grow. Furthermore, only make the move once you’re certain you have all the resources to manage it.
