Whether it be out of a naturally competitive spirit, a desire to improve the quality of life of individual customers, a wish to contribute to the success of business clients, most business leaders have an inherent desire to grow the entities they are responsible for.
We all want to increase the number of customers we serve, the markets we are present in, and the range of products and services that our businesses offer.
If we do this correctly, we improve our profitability and cash-flow which enables further expansionist reinvestment in the firm, greater levels of rewards for shareholders and employees, and higher levels of resilience against external shocks.
Growth and development are also essential parts of any businesses focus for several important reasons:
– No matter how well you look after them, your existing customers will leave you one day. They may switch suppliers who underbid you, their project may finish, or they may relocate. When this happens, you are going to have a large hole in your P&L which, if that business is not already replaced ahead of time, will cause you significant financial concerns.
– Growth increases revenues which should reduce your fixed costs % and improve your purchasing power and other economies of scale which increases your net profit and cash flow, and which allows you to continue reinvesting, diversifying and growing your business.
– Bigger businesses are a more attractive proposition for potential employees. Most people would rather work for a large company with a strong financial base that provides long-term job security rather than smaller one with less visibility and resilience.