Top 3 Reasons Small Businesses Struggle to Grow (Scale)
It’s common knowledge that a lot of startups never make it and the percentage of small businesses that fail within five years is pretty high. Frankly, there are a whole host of reasons, some tangible and some not so much, that a business can fail. But, many entrepreneurs experience success and many businesses thrive in the long run. So what’s the real difference? Sustainable Growth!
Among the numerous reasons for failure is an inability to grow and again there are many potential reasons why a company cannot grow. But, assuming a company has a great product or service to offer and the market is right and they are properly funded - what prevents success? It is an inability to effectively scale the business and achieve sustainable growth. Here are the top three reasons small businesses struggle to grow.
Lack of Planning - From initial business plans to incremental strategic planning, small companies who fail to put in the time it takes to create a proper road map often fail to achieve the necessary focus required to achieve growth. This includes planning organizational structure, operations, and culture in order to execute strategies and leverage competitive advantages with accountability and discipline. .
Minimizing the importance of, and the efforts in the discovery, analysis, and planning process leaves too much room for ambiguity. This lack of clarity hinders organizational alignment with vision, which prohibits effective prioritization of objectives. Furthermore, it prevents getting the right people onboard to execute.
Without planning companies will have difficulty acquiring and developing the talent they need to scale their business. People are the key component to any successful company and with proper planning firms can attract, develop, and retain top talent ensuring they always have the right people in the right seats to enable growth.
Inefficient Operations - Processes, procedures, workflows, and communications must be deliberate and should coexist without creating redundancy or waste. Methods of operation should always optimize productivity and profitability too. If a firm does not properly establish the way it carries out business, shares knowledge and information, and communicates across the company, operations will create drag instead of propulsion.
Procedures and workflows do not exist in a vacuum, companies who leverage systems thinking are better able to create and maintain efficiencies across functions. This includes ensuring information does not become isolated, that communications are effective and language is consistent. Companies who do this well are able to take advantage of visibility, clarity, and unity to keep growth on track.
Additionally, successful businesses establish processes for continuous feedback, learning, and improvement. Without proper structure to manage systems and processes, procedures will become inefficient and stall growth.
Resistance to Change - Lets face it, in today's businesses change is imperative and companies who have the proper culture, structure, and leadership to effectively manage change can sustain healthy growth. Those companies who do not prioritize proper change management will struggle to scale in the short-term, but more importantly will be unable to survive in the long-term.
In order to manage change effectively it must be a key organizational capability that is at the heart of your culture. Companies who cultivate a growth mindset, value continuous development, create opportunities for learning, and hold everyone accountable generate change capabilities across the organization.
When coupled with inclusive, trustworthy leadership that inspires teams through purpose, they develop and maintain a high capacity for change which enables all strategic objectives and strengthens competitive advantages. Plus, establishing this type of ecosystem allows companies to acquire, advance, and maintain the right people that will facilitate expansion.