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Entrepreneurs

Why Growth Could Be the Worst Thing to Happen to Your Business

Focus on the next customer and the next level will take care of itself.
Why Growth Could Be the Worst Thing to Happen to Your Business
Image credit: Westend61 | Getty Images
Guest Writer
Founder of PJRVS
7 min read
Opinions expressed by Entrepreneur contributors are their own.

We’re constantly fed this idea that if our business isn’t growing, it’s failing. Fortunately, like anything in business, one rule doesn’t always apply.

This is where business advice and reputable studies differ. Rapid or unchecked growth can end up being the downfall of a business, instead of its guiding light. It’s not that growth is bad or should be avoided at all costs, it’s just that it should be questioned before proceeding.

Growing our businesses could be the worst decision we make for the longevity of them. Let’s look at five reasons why growth may not make sense for our companies.

Related: The 5 Phases of Building a Self-Managed Company 

1. Resilience. 

As Dean Becker, CEO of Adaptiv Learning Systems, told me, the amount of resilience a person has is the most important part of their ability to succeed -- and accounts for more than even their training, education or experience.

Luckily, our ability to be resilient is not just an innate trait we’re either born with or not. Being resilient requires that we focus on and work towards developing three traits:

  1. Having a greater sense of purpose for why we’re doing what we’re doing, even if things go wrong or aren’t currently working out.
  2. Recognizing that we cannot control everything, and recognizing accepting reality for what it is -- something we can steer but not fully be command of at all times.
  3. Developing an ability to adapt as things change, so we can pivot with differences in the market, in customer requests and shifts in technology.

Being resilient as a business is much harder for a large organization because there are simply too many resources at play, too many moving parts and too many shareholders making decisions to move quickly enough to adapt. Smaller businesses, at their core, have less resources, less moving parts and less decisions makers, and can therefore be nimble enough to move with changes that could negatively affect a company.

2. Autonomy.

Companies of one are becoming more popular because people want more control and autonomy in their lives, especially when it comes to their careers. This is why so many people are choosing this path: staying small (or even working for ourselves) lets us control our own life and job.

Smaller companies also set up Results-Only Work Environments (ROWEs), in which employees don’t have set schedules, all meetings are optional, and it’s entirely up to employees how they spend their time working. They can choose to work from home, they can work from 2:00 AM to 6:00 AM if it suits them, and they can sculpt their job however they want, as long as the results benefit the company as a whole. Cali Ressler and Jody Thompson have defined and then studied ROWE implementations for more than a decade, and they found that in these kinds of autonomous environments, productivity goes up, employee satisfaction goes up, and turnover goes down.

Related: How to Create a Growth Mindset as an Entrepreneur

3. Speed.

Companies like Basecamp have a four-day workweek during the summer (no work on Fridays) because it helps them prioritize what’s important to work on and what they can let go of. The key for their employees is to figure out how to work smarter to accomplish tasks with the time they’ve got, not just harder. Smaller companies are afforded the same opportunity. We can question our systems, processes and structure to become more efficient and to achieve more with the same number of employees and in less time.

Speed is not merely about working faster. It’s about figuring out the best way to accomplish a task with new and efficient methods. This is the concept at work in the ROWE method: employees no longer have to work a set amount of time, but are rewarded when they finish their tasks faster. By being smarter at getting more work done faster, we can create a more flexible schedule that fits work into our life in better ways.

Another aspect of speed in a company that questions growth is the ability to pivot quickly when a customer base or market change. As a solo worker or small company, this can be much easier to do, because we have less infrastructure to cut through.

4. Simplicity.

Typically, as companies gain success or traction, they grow by taking on additional complexities. These complexities can often detract from a business’s original or primary focus, resulting in more costs and the investment of more time and money.

For a company at any size, simple rules, meaning simple processes and simple solutions typically win. Adding complexity is almost always well intentioned, especially at large corporations, where, as complicated processes are added to other complicated processes and systems, accomplishing any task requires more and more work on the job and not toward finishing the task itself. It can be a slippery slope. One step is added to a process without increasing its complexity too much, but then, after a few years of adding steps here and there, a task that once took a handful of steps now requires sign-off by six department heads, a legal review and a dozen or more meetings with stakeholders.

Related: Want Startup Success? Keep It Simple, Stupid!

5. Durability.

The current business paradigm teaches us that to make a lot of money or to achieve lasting success, we need to scale our businesses -- as if larger businesses are less prone to fail or to become unprofitable. Before our imagined businesses are even off the ground, we need to create them with the sole purpose of growth -- and possibly eventual sale for a huge profit. This paradigm, however, isn’t rooted in truth, nor does it hold up against critical investigation.

Although contrary to most popular business advice, growth as a main goal or performance metric can actually be quite dangerous to the long-term operation of a business. In 2012, researchers from the Startup Genome Project looked at data from more than 3,200 high growth startups and found that more than 70 percent scaled prematurely through rapid growth and ended up failing -- closing shop, selling off the business for cheap or having massive layoffs -- because of it. The findings in this study where echoed in a similar study done by the Kauffman Foundation, where they found that 5 to 8 years after starting, more than two-thirds of high growth companies had to shut down due to the same reasons as the first study.

With these reasons in place, it may make sense to not grow and instead focus on where our business can do things better -- instead of just in a bigger way. Let's start to consider the idea that perhaps the byproduct of business success isn’t always growth and scale, maybe it’s just being able to have the freedom to make decisions that are best suited for the longevity of our business, the happiness of our customers and what makes the most sense to improving our bottom line.

Staying small doesn’t have to be a stepping-stone to something else, or the result of a business failure -- rather, it can be an end goal or a smart long-term strategy. For businesses that question growth using the Company of One mindset, instead of assuming growth is always beneficial, we can think about what we can do to make our businesses better instead of just bigger.

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