Business Turnarounds: Slow Growth May Mean Slow Death

We talk about how rapid growth is dangerous and can lead to rapid death as we spin into oblivion, outdistancing our cash capabilities, reducing service to our customers and watching quality drop...all resulting in a death knell. Death from too much, too fast; this story we know well.

However, this does not mean slow growth works better, because in many instances slow growth can also be a slow death.

As in many matters, it is balance we must achieve to succeed, with the context being growth as fast as possible but in balance. In other words, sales, production and finances must be in sync and then rapid growth can be achieved. Typical stumbling blocks are closing a large customer that immediately pumps in significant growth without you having the ability to support it with manufacturing and service. The big order we all pray for comes and when it arrives it tanks our capability.

Alternatively, slow growth while comfortable and easier, allows competition to gain headway, and can eventually allow them to take a lead share of market and block your long term growth and success.

Complacency is the enemy, rapid growth is the objective, but in control and balance.

Cash flow is the issue, as today's growth is paid for in thirty days and your receivables are based on last month's smaller sales, thus, cash flow planning is the critical issue for survival in a growth curve. The more rapid the growth, the greater is the need for cash. Not enough cash and delays occur as you wait for your receivables to come in and the overhead eats you alive as you wait and your new client become unhappy... failure sets in.

Quality employees require training and training requires time and effort. Another cash requirement but critical, so do not leave this out of your balanced equation. You must plan and implement parts of your growth plan before it happens and prepare so when it arrives you are ready. But this must be balanced with the ability to afford it, before the new cash arrives.

Sales, cash flow, and production must grow together or at least in sync with the requirements of a growth curve. Slowing down is not the objective. Speeding up is but controlled growth is the requirement for success. It should be as rapid as possible but within a planned growth curve.

Not too fast, just fast enough.