When entrepreneurs launch their businesses, they often think rapid growth and record-breaking sales numbers equate to success. And with so many media outlets covering startups boasting incredible spikes in their revenue and customer bases, it's easy to understand why. Companies that don't see fast expansion may feel discouraged, but is this type of immediate success really sustainable?
Business owners who focus on growing quickly may want to take a lesson from the classic "tortoise and hare" fable, in which the slow but steady tortoise won against the hare. Though speed might put you ahead of the competition at first, you'll likely end up burning out before the race is over.
"There is always a desire to move it to market as soon as possible, lest [the business] becomes obsolete or a competitor yanks the title of 'pioneer,'" said Jay Jumper, president and CEO of electronic signature service company SIGNiX. "This is a natural mentality for business owners, but it's not always the best strategy for building a successful company anchored in long-term development and growth. Rather, deliberate, steady maturation, characterized by careful research and long-term forecasting, allows a company to position itself for enduring success and sustainability."
"Steady growth that builds on a strong foundation is better for all the vested parties in the long term," added Numaan Akram, founder and CEO of Rally Bus, a crowdsourced event transportation company. "Companies that grow fast are often foregoing fundamentals — profit, processes, protocols, etc. — which leaves them open to competition. A company that built [its] foundation with strategic thought will be less vulnerable as it accelerates growth." [Grow Your Business: 5 Tips for Scaling Up]
Maintaining slow but steady business growth
In an age of instant gratification and decreasing patience and attention spans, "slow and steady" is a difficult path to follow. It takes smart restraint, intense focus and a true vision of the future needs of the marketplace, Jumper said. If your goal is to build a slower but longer-term strategy for your business, here are a few tips to help you accomplish it.
Take your time, but be ready to move quickly when necessary. This advice sounds contradictory at first, but Stephen Sheinbaum, founder of alternative financing company Bizfi, said that following it is what helped his business stay ahead of the competition.
"There is, for some companies, a temptation to grow rapidly just to stay in the headlines," Sheinbaum said. "It took [Bizfi] 10 years to reach $1 billion in funding originated, and that was absolutely the right pace of growth. We took the time to refine our underwriting, and as a result, we are extremely happy with our portfolio's performance. Not every company in alternative finance can say that."
While it's a good idea to slow down and really refine your product or service, you also need to recognize which opportunities can help you grow — and when you find one, be ready to move in and seize it, Sheinbaum said.
Invest in the right people when you need them. Hiring more staff to ensure growth is a double-edged sword: You'll have more human capital to get your "growth" work done, but you'll also have a much larger payroll, which could ultimately hurt you if you don't expand as quickly as you thought you would. Therefore, strategic hiring — finding the right people at the right time — is very important.
"One of the best ways to ensure steady growth is to invest in people," Akram said. "Co-founders and early employees [must] have proficiencies that complement each other. [You need] angular individuals [to] come together to create well-rounded teams."
Sheinbaum noted that your business should be constantly adding employees who have cutting-edge skills in the areas in which your business wants to expand, but only if it makes sense to do so.
"There is no point in making a hire if it is not going to add to the growth of the business," Sheinbaum said.
Keep an eye on your cash flow. Quick, exponential growth doesn't necessarily guarantee future burnout, but slow growth doesn't ensure longevity, either. It's all about running your business smartly and efficiently, regardless of your growth rate, said Martin Okner, co-founder and managing director of business advisory firm SHM Corporate Navigators and chairman of ACG New York. He told Business News Daily that managing your company in a way that maximizes cash flow will put you on the path to success.
"We often see companies that are growing rapidly make the mistake of investing too much money and time into marketing and staffing, and not enough time and money on the innovation pipeline, channel diversification and development, order fulfillment, and supply chain," Okner said. "[However], slow-growth companies spend too much time and money on innovation ... while not investing enough time and money into sales. Either trajectory, if managed well, will work out in the long run."
Plan for the future, rather than just acting on current trends. If you're in an evolving industry like technology, you know how important it is to stay on top of what your competitors are doing. A strategy based on trend chasing might get you immediate results, but you'll be better equipped for real, lasting growth if you look toward the future as well.
"Envision long-term operations from the start," Jumper said. "Not only do you need to think about what your product or service will look like a decade or more into the future, you should consider the greater trajectory of its application.
"For instance, highly regulated industries like health care and financial services weren't jumping on the e-signature bandwagon when we started, but that's where we envisioned real success because that's where there are a lot of paper-heavy transactions," he added. "With a clear destination in mind, we could build a strategy to win the race to get there with a deliberate strategy."