The Downside of Exponential Growth

The downside of exponential growthNearly every business owner dreams of exponential growth. The opportunity to propel your business into something much larger and that will stand the test of time is what drives most entrepreneurs.

The pace of business today has increased the opportunities for exponential growth; things move faster, markets open more quickly, and opportunities arise seemingly out of nowhere (or from the other side of the globe). The increased opportunity for fast growth is more tantalizing because it is more common and more visible than it has been in the past.

But exponential growth is not a magic carpet ride to the top of the heap. Achieving it can be like holding on to a rocket ship during takeoff. Managing a fast-growing company requires 360-degree vision, great work ethic, an eye for talent, and – truthfully – a little bit of luck.

Here are a few downsides that can arise from a company’s exponential growth:

  • The company becomes less cohesive. A successful company has all departments working in concert. However, when you are operating on an amped up time frame, cohesion can suffer. Maybe IT is not able to keep up with what Marketing wants. Maybe Sales cannot report in to Finance in a timely and accurate way. When a business is not moving along in a uniform fashion cracks can emerge, and that can be dangerous.
  • The company outgrows its talent level. The team you have today does not necessarily translate to success on a bigger stage. Not all of your internal resources and/or outsourced service providers will be the right fit as the company grows. Some employees simply are not built to run a marathon at sprint pace. And new members of the team may not have a clear understanding of the company’s way of conducting operations. Loyalty is important in business, but leadership needs to be able to take a clear-eyed view of both present and future needs.
  • The quality suffers. When a company is moving at light speed, it often cannot deliver a product or service that is as good as the company would like. When you are moving too fast, corners might get cut. Some of this can be acceptable, but if quality drops too far the impact can be devastating.
  • The company loses track of its mission.  When a business is striving for exponential growth, it can begin to chase bad business, or it can move in a new direction that does not really fit its core purpose. The quest for more top line revenue leads some companies to make the wrong decisions.

Pointing out these potential pitfalls is not meant to scare entrepreneurs away from chasing their dreams. But it is important to set the right expectations for the road ahead because there will be obstacles and challenges. If you know where they are, you can plan ahead and react quickly when things get off track.

Contact us at (215) 441.4600 if you have questions or would like to discuss how this topic may impact your business.