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Why Business Stagnation Means Death For Small Businesses

Posted on December 9, 2015

Business stagnation

Even a quick skim through the financial pages of any newspaper, or tuning into a financial channel, will show an almost fanatical focus on one aspect of business in particular – growth. Time and again, you’ll hear variations on the theme that if a business isn’t growing, it’s effectively dying.

This can be a confusing concept for small business owners to get their heads around full stop. Once they do grasp the essential truth of it, many fail to see how it applies to a company of their size. Surely this is just a concern for the Apples and Facebooks of this world? The answer is an emphatic no.

Small businesses simply have to hitting regular growth or the lights could be going out a lot sooner than you expect. Let’s look at two classic reasons why small business stagnation means death to business itself.

 

  1. Your Business Has To Become More Than You

The sad reality for most small business owners is that they are not really running a business at all – they are simply managing their own job. Often times, this is a pretty stressful job to boot. This is often a largely unavoidable state of affairs at the very beginning of your entrepreneurial career, but it’s one that far too many people never get beyond.

If your small business isn’t growing, you have no way of being able to hire people to replace you anytime soon. Lack of growth turns this into a Catch-22 situation where you can end up spinning your wheels for a very long time. Growth is the engine that allows you to scale.

 

  1. Winds Will Not Always Be Favourable

Assuming you’ve managed to get over the hump of our first point, the need for constant growth will not be going away anytime soon. In fact, it will be a constant companion of your business for many years to come.

Let’s get another unpleasant reality out of the way: most small businesses are one to three bad months away from total collapse.

It often doesn’t look that way from the outside when palms are being pressed, sales calls closed, and a whirl of general activity is taking place. Seen from the inside however, most small business owners know all too well that things are tight more often than not.

When your business is up and running, you have very real ongoing costs in terms of payroll, suppliers and so on that you simply have to meet on a monthly basis. If your business isn’t growing, you’ll inevitably find yourself bumping up closer and closer to your overall financial ceiling on a monthly basis.

Go through a prolonged period of no growth, and you put yourself at huge risk of any combination of unexpected circumstances scuppering your tiny ship once and for all. Put simply, if you’re not growing as a small business, the day you’ll be closing up shop once and for all is not going to be far away.

Growth gives the opportunity to set up various levels of financial cushions and security, insulates you against negative changes in existing markets, and gives you the ability to plan ahead.

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We know from experience that the real focus in the small business trenches is often survival – and that’s perfectly fine as far as it goes. If that’s your only focus, though, that will be literally all you get and the ride will be both painful and short. Shift the focus of your mindset to growth and you open the doors to wider success!

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Filed Under: Leadership

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