Why Rapid Growth Should Be Alarming for Businesses

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Say a business has great services or very useful products. Because of this, sales significantly sky-rocketed in the first few months of operations, and income has tremendously grown. Within the early years of its existence, the company is already earning billions of dollars. So I guess it’s safe to say that the business is successful, right?

Wrong! There is so much more to a business than just financial viability or physical assets. The real mark of a successful business is sustainability. A fast-growing but unsustainable business is not likely to survive in the long run.

What Makes a Business Unsustainable?

This can be due to a variety of reasons. For one, it can be because the business is spending more than what it’s earning, or it can’t keep up with the fast, shooting growth with all its complexities. Another reason is the incapability to innovate and meet the demands of consumers or a total lack of understanding of the market they’re trying to tap. It can also be because the business is not adding value both to the company itself and to the individuals that comprise it, which hinders long-term adaptability and efficiency.

More often than not, entrepreneurs are looking into how to grow their businesses quickly, even if their company is not yet ready. Sustainability efforts are often overlooked, with every business owner having their eyes on the prize. Say, for example, you started a transportation company in the trucking industry. The demand for your company has been steadfast in your first few years of operations. This then prompts you to invest more in your tools and equipment to improve your service. You buy new vehicles to join your fleet, invest in good equipment such as off-road LED lights, hire more drivers, and ramp up your operations. But the question is, are you sustainable?

What’s essential is to grow the business from the ground up. That means looking at and addressing what seems to be small factors, but in reality, are imperative to growth and sustainability.

It’s easier to understand with a real-life example. Take, for instance, Zynga, a brand engaged in the business of developing online games. Their games like Poker and Mafia Wars were a huge hit, earning hundreds of millions of dollars in 2011. But 2015 saw a downfall for the company. Because of the lack of innovation and inability to sustain and develop their brand, Zynga’s popularity declined quite rapidly, and up to this day can no longer revive the status it used to have in the gaming industry.

How a Business Can Become More Sustainable

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Although these times have seen an inclination to short-term thinking and mindset, businesses have to look forward and ahead. Those that rely on what there is to gain right now often end up finding themselves completely unprepared and unequipped for what’s to come. Setting long-term goals allows for directing corporate activities towards a more sustainable business plan that pays out both to its internal and external partners.

A report by the Business and Sustainable Development Commission shows that the untapped area of sustainable business has in store an opportunity worth $12 trillion. But most businesses don’t enter this realm of opportunity.

Rapid and speedy growth isn’t always ideal. At the same time, a progress that’s too slow will cause a business to remain stagnant and end up not growing at all. Companies should learn to find that balance, or as the entrepreneurial world calls it: the sustainable growth rate, the maximum rate of growth a business can achieve without exhausting all the finances it has at its disposal.

The reality in the entrepreneurial world is that fast-growing companies don’t always maintain their momentum, and end up tumbling down the road to failure. In fact, slow-growing companies end up performing better than companies who experience rapid growth in the early stages of business. It goes to show that the only companies that will survive and thrive are those capable of innovation, adaptability, and most importantly, sustainability.

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