Most entrepreneurs prioritise growth by default. More growth = more money, right?
Actually, no. Growth does not always lead to more money.
It's very easy for your turnover to skyrocket while your bank balance dwindles due to internal inefficiencies. Cash flow constraints, over-gearing, and customer concentration are just some of the latent defects that growth can amplify. In extreme cases, it can precipitate a crisis that spirals quickly out of control.
Even when growth does lead to more money, it's not always enough.
An owner-run SME is a very risky investment relative to other assets, and most entrepreneurs under-estimate the rate of return that they need to be fairly compensated for that risk. Why invest in your business if you can enjoy the same (or possibly even better) returns with less risk somewhere else?
So before you rush headlong into growing your business, consider the following:
1. What is your required rate of return?
(If you don't know, you're basically gambling without even knowing the odds)
2. Are you getting the rate of return that you need from your business?
(If not, you should probably fix that first)
3. Is your business ready?
(Growth can escalate latent sustainability risks into full-blown crises)
4. How should you do it?
(Most entrepreneurs assume that they need more customers, but there are often smarter alternatives)
Don't assume growth is your top priority. Having worked with hundreds of owner-run SMEs, we've found that many of them simply aren't ready for it and are overlooking more urgent priorities.