Why Grow the Business? A Strange Question But You Need to Answer it
In a management team meeting, one manager who is in charge of software development was challenging the idea of why the company needed to grow. What was wrong with staying as we are? Why make unnecessary changes? Things seem to be going along pretty well so let’s not rock the boat.
To many who may be reading this, the general absurdity of the question would just pop into your mind. How could someone in today’s business world challenge the idea that the company needs to grow? Where has this person been hiding? Don’t they get the absolute necessity why we need to grow? You may even want to shout the oft paraphrased line “If we aren’t growing, we are dying.”
In short, the answer is that there are a LOT of people who may not get that growth is important and just don’t understand the context. They may get the broad idea but don’t know how that affects them and their work. Obviously, each person grows a little older each day. We read an article and we grow our knowledge. We eat a little too much food and we grow our waistline. We get paid and we grow our bank account.
The discussion of business growth needs to encompass some complex issues about revenue, cost of goods, R&D, employee pay and benefits, rent, insurance and more. We also need to add a layer to this of the company mission. I hope to provide you with both the broad and the specific needs of growth that you can use in your communication to employees. In a future article I will describe the problems of growth which may be the more deep-seated issues at hand.
Broad reasons to grow the business
Growth will allow us to fulfill our mission — As Simon Sinek talks and writes, a company has to have a Why. The Why is the mission of the company. Why are you in existence? If the organization, whether public or private, for profit or not for profit, is not doing work to fulfill their mission, then the organization is meandering and does not have a focus. When you are meandering, you are certainly not growing. When we focus on the mission and create widgets or software or services that are provided to customers, we should want more customers to use those widgets or software or services. When we want more customers to use our products that means we need to grow, either more products or more customers.
I have not yet met anyone that has said, “Well, we sold our 100th customer. That’s all I ever wanted to do. Time to close the company.” You don’t have to have a zillion products, but you need to have products that are core to the mission. Apple doesn’t make a lot of different things but the ones they do produce are directly linked to their mission. They happen to sell a lot of them. The point here is that in order to fulfill the mission the company needs to keep moving forward and change and adapt to its customers. You can’t do that if you are static. If you are waiting around for things to happen you will get run over by someone, most likely the competitor.
If there is no growth you are wasting the resources you have right now — Every organization has a number of resources that they are using; cash, time, employees, computers, inventory, knowledge. If for some reason you say that we are not going to grow, then all of those resources are being wasted and could be used more effectively elsewhere. If you have done any type of training of employees then you must have some change you want them to make, be a better leader, streamline processes, move inventory more quickly, whatever it may be, then you have invested in your growth. If you decide not to grow then you have wasted all of those resources, employees time, trainers, money. So when you decide to grow you are now being more efficient. You are also using the resources you have to leverage change for the better.
Growth will conquer the competition — One significant broad-based reason to grow is that you can conquer your competition. In any given market, except monopoly style markets, there is at least one competitor that is trying to beat you. For a given market they want more customers than you because that brings in more revenue, so they can invest in more product development, to sell more products to your customers, making your slice of the pie smaller and smaller. A growth mindset puts you in the driver’s seat. Without the growth mindset to bring in more customers, make more products, sell more products, then you have conceded your place in the market. You will struggle to keep customers that have moved over to the other guy because you are no longer considered the leader. When you lose that status, it is extremely hard to get it back. Achievable but costly and drawn out.
Specific reasons to grow the business
So now let’s turn to more specific reasons from growth
Growth brings in more revenue — Every organization needs money to survive and thrive. Some may think that profit is a mean, capitalistic worship of a false god. But without profit, without a surplus for not-for-profits, then there is no future for the organization. Some have said that “profit is oxygen.” As individuals if we do not have oxygen then we die. Organizations need profits or they die. Investors will only go so far to inject money into an organization that is not making a return. Benefactors will stop donating if they don’t see services being delivered. You may have to have a deep discussion why loss leaders only go so far. Not everything you make can be a loss leader. Something has to be a cash cow. In the end, growth means more revenue which means more profit.
Growth can decrease your cost of goods — Increases in sales can help decrease the cost of the goods you make because there are always some fixed costs and some volume discounts that can be exploited with buying more inventory.
Growth will offset increases in employee costs, raises — Employees need money to survive and each year that erodes due to the cost of living. If your revenue is unchanging each year then raises will cut into your profit. As sales increase, there is the ability to provide for raises to employees without sacrificing profit.
Growth will allow you to hire more people — Some organizations feel that one of their goals is to improve society. When you grow you need more people to fulfill the orders that are coming in. So, growth allows you to provide that helping hand while at the same time providing better service.
Growth will pay for rents — Your organization needs to have an address and a pace for employees to work. Energy costs, taxes, maintenance, insurance, all the items that feed into the cost of the building, goes up each year. When you grow you are able to afford to maintain and maybe improve the facility in which you and your employees work.
Growth will pay for benefits — Some employees are motivated not by the paycheck but by the benefits. Whether it is paying for health insurance or a cappuccino machine, fitness equipment, ping pong tables or whatever, when you grow you have the ability to provide these benefits that can attract and keep good employees.
So, to circle back, growth is vital to a thriving organization, one that is expected to be around for more than a couple of years. At the same time, you need to provide communication to ALL of your employees as to why you want to grow the business, how you want to grow the business, how that growth impacts the customers, impacts the employees. Be specific. The more detail you provide can give an employee can change a naysayer to believer. When that happens, then growth is bound to follow.
QUESTION: What was your biggest takeaway from this story, or from this post? Share in the comments below!
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