When asked about business growth goals, many entrepreneurs caught in the messy middle respond with vague statements like “do better than last year” or “double what we did last year.”
These off-the-cuff answers don’t stem from a lack of ambition; They expose a lack of strategic thinking necessary for establishing clear goals, which are essential for guiding decision-making and ensuring long-term success.
For most small business owners, achieving growth often feels like a mystery surrounded by uncertainty and challenges. This ambiguity happens when we’re caught up in day-to-day operations, constantly addressing urgent issues instead of focusing on long-term strategies that drive growth and sustainability.
Business Growth: Not as Easy as it Seems
During the economic downturn of 2008, entrepreneurs faced the harsh realities of an economic retreat. Revenues dipped, budgets were slashed, and talent was reduced just to stay afloat.
My father, a product of The Great Depression, would always say, “We need to tighten our belts.” And tighten our belts, we did. Despite these efforts, many businesses couldn’t survive. The failure rate for small businesses hit 4%, and an additional 12% shuttered in 2009.
Still, some companies managed to sustain a 20% growth rate and weather the storm.
Fast forward to 2020, and we faced another economic upheaval due to COVID-19. By April 2020, 22% of small businesses had vanished despite PPP support—that’s 3.3 million businesses gone. One year later, nearly 37% of small business owners anticipated that returning to normal operations would take longer than six months, with talent acquisition being their primary concern.
Despite the uncertainty of the past 15+ years, optimism remains high among small business entrepreneurs. That’s encouraging news!
Business Growth: How Fast is Too Fast?
While pursuing my MDE (Management Development of Entrepreneurship) at UCLA Anderson School of Business, I had the privilege of studying under Professors Yvonne Randle and Eric Flamholtz. They created a framework to prepare entrepreneurs for business growth.
Based on their extensive work, they identified five rates of growth for small business firms (from “Growing Pains…Transitioning from an Entrepreneurship to a Professionally Managed Firm” by Eric Flamholtz & Yvonne Randle):
1. Less than 15% annually — Sustainable Growth
While this rate might seem modest, it allows a business to double in size over five years. Not too bad! For many small business entrepreneurs, doubling in five years would be a welcome change from “a different year, the same revenue” situation.
2. 15 – 25% annually — Rapid Growth
Rapid growth is exhilarating but it can also be exhausting. Business owners at this rate of growth often find themselves stretched thin, juggling time, talent, and finances. This accelerated growth often requires an infusion of capital. Although the idea of a capital infusion can be daunting it’s often necessary for breaking through to the next level. Being strategic helps you manage the risks — and reduces your stress.
3. 25 – 50% annually — Very Rapid Growth
With very rapid growth, we see a significant increase in performance or market expansion each year. This often indicates a company or sector that is scaling quickly and capturing market share quickly. This rapid expansion highlights the company’s ability to adapt to changing market conditions and it also underscores the potential for long-term sustainability.
4. 50 – 100% annually — Hypergrowth
Companies experiencing hypergrowth are scaling at an exceptional pace, often outpacing competitors by rapidly expanding their operations and customer base. These companies typically leverage innovative strategies, advanced technologies, and agile practices to sustain their accelerated growth.
5. Greater than 100% annually — Light-Speed Growth
This level of growth signifies that a company is more than doubling its size every year. Such accelerated expansion often indicates a strong market demand, innovative strategies, and dynamic leadership driving the business forward.
Your Goal for Business Growth
Rapid growth is enticing. It offers the promise of increased revenue and market presence, and it can also bring significant challenges.
A business that expands too quickly may outpace its existing infrastructure, leading to operational inefficiencies and logistical bottlenecks. This results in your business struggling to manage its newfound success, potentially choking on the very growth that seemed so promising.
Final thought…
Being strategic aids in managing risks. By strategically planning for the year ahead, you can navigate the year more effectively and focus more precisely on your goals. You’ll maintain a sense of control, ultimately leading to a more balanced and less stressful growth experience.
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At Synnovatia, we specialize in helping small business owners caught in The Messy Middle unlock their growth potential. If you’re ready to pave your path to strategic business growth, reach out to us, and let’s make your growth goals a reality.
