In most cases, what’s needed for one to have a successful business is a unique product or service, a vision for growth and expansion, and a dedicated customer service. These three ingredients usually indicate the direction any business is heading. If you get it right with these three, chances are you’re on the right track headed in the right direction. One of the main goals of most small businesses out there is expansion and growth. As much as you may want to grow your business for whatever reason, the circumstances may force you to limit your growth.
Of course, every business wants to grow for economies of scale and many other reasons. No one starts a business to fail. Here are top reasons why an entrepreneur may decide to slow down the growth of his or her business.
The Time one needs to Achieve Profitability
Growing a business without a profitable business model can be the worst thing an entrepreneur can do. Of course, there are those who decide to expand their business before it reaches profitability. As an entrepreneur, it’s important to focus on refining your business model until it reaches profitability before considering growth. That’s how you can stay in business. If you decide to expand and grow your business when you’re still spending more in wages than your bill rate, you might end up closing soon.
Unwillingness to let go
Ever met someone loves what he does and is never willing to delegate some of his responsibilities or work to anyone else? Some businesses never grow because of such a mentality. At times growing your business will mean delegating part of your decision making authority to a few other people. If you’re unwilling to make it happen, you’ll have made a conscious decision to remain at your current business size.
Fear of Putting your Financial Stability at Risk
Most entrepreneurs tend to settle at their current position because the business seems to be helping them achieve their financial objectives. They are, therefore, no willing to incur any additional risk that comes with further growth.
Avoidance of Regulation
It’s so funny how a business with the potential to expand its operations can decide to limit its growth simply because of some requirements. We’ve heard of small banking institutions which decide not to cross a certain number of employees because of the recordkeeping requirements needed. General contractors prefer working as solopreneurs because they cannot keep up with the paperwork and documentation required by employing even a single person.
There are many other reasons why business owners decide to limit the growth of their businesses. Some of the reasons could be valid. In addition to the discussed points, some businesses may choose to limit growth to maintain sustainable growth through its internal cash generation rather than seek for external financing. This sounds like a valid reason. Well, where do you fall? Are you one of those who doesn’t want to grow their business because you’re avoiding some regulation or you’re not willing to let go? Think about it.