Top 10 Reasons Not To Expand
Sometimes, entrepreneurs cite specific reasons not to grow. Circumstances will differ but there are always alternatives to growth. Consider carefully before over-riding these concerns.
Timing isn't right.
An important consideration is readiness of management, operations and finances for the G-forces of liftoff. Other considerations are general economic conditions, industry circumstances and other matters. It may be right to wait. But don't expect every star to come into alignment - conditions are never perfect. Part of the challenge of growth is making changes on the fly.
Owner is already spread too thin.
Particularly if the business is still in its early stages, the owner may be busier than a one-armed paperhanger. Heavy consumption of cash is already stretching financial resources as well. Don't let small startup problems turn into major disasters by going for too much at once. Careful planning and the right business structure could overcome these constraints.
Dislike of greater structure required of larger businesses.
Do not try to run a big business like a small business. If you can't do budgets, manage according to objectives, delegate authority and work within some simple but meaningful operational boundaries, stay small or sell to someone else.
Business is already at optimal size.
Companies tend to have a "best" size for its current organization. Any larger and unit costs actually begin to increase. Any smaller and it isn't maximizing use of assets or obtaining economies of scale. In this situation, a company needs to change dramatically to grow: bigger facilities, more machinery, re-engineered systems, re-assigned duties and so on.
Cannot tolerate instability.
Growth brings undeniable - though hopefully temporary - instability to the company as it incurs extra costs before new revenue begins to come in. The result can be stress, financial pain, investor demands and the appearance of organizational disarray. It's a question of tolerance.
Do not have skills to manage larger company.
Some owners conclude they could not learn to manage a big company. From an investor point of view, this is preferable to finding out through experience. An entrepreneur, however, may wish to know conclusively through experience.
Insufficient resources.
Borrowing capacity and the internal treasury of the company, if any, can be a deciding factor in the choice of whether or not to grow. Remember, it is wise to have some emergency resources in reserve as well.
Don't want to attract competitors' attention.
Taken alone, this is usually not a good reason to avoid growth. Niche strategists may consider whether waiting for competitors to chance upon your market may simply allow competitors to choose the circumstances of the battle.
Fear of failure.
A common sentiment but this should not be a decisive factor. All challenge creates anxiety. If fear is overwhelming, perhaps the owner should consider selling the business.
We're comfortable right now - don't want to rock the boat.
This may be fine as a temporary situation, but the company's competitive position in the future must ultimately rule the day. Make the decision that's best for the business.
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