Growth is something which is liked by all whether that growth is in personal life in the form of your kids growing up or in professional life in the form of an increase in salary and status in your company. In the case of companies, they also love to see growth in the business, business growth in simple words refers to that situation in which the business of the company is increasing quarter on quarter or year on year. While business growth is a good thing but sudden business growth can prove to be disastrous for a company in the long run, in order to understand this point one should look at some of the advantages and disadvantage of business growth –
Advantages of Business Growth
Brand Image and Consumer Trust
The first and foremost advantage of business growth is that it helps the company in creating a brand image and increase consumer trust because when the business grows it shows in the form of more advertising campaigns by the company, an increase in the number of billboards, more visibility of company’s products everywhere and so on. For example, if you visit a supermarket and there you purchase a particular brand now next month you visit the supermarket again and there you see 5 products from the same brand and after 3 months you again visit and see 20 products from the same brand then it will lead to increase in consumer trust in the brand and also an enhancement in the brand image of the company.
Bulk Discounts and Higher Credit Limit
Another benefit of business growth is that when business is growing than the company will produce in large quantities so as to meet the growing demand and due to this company will be able to raw materials and other factors of production at cheaper rates due to bulk purchases made by the company besides company will also be able to get higher credit limit as banks or financial institutions provide loans or credit limit on the basis of turnover and profits and when the business grows than both turnover and profit increases resulting in company enjoying higher credit limit which can be put to profitable use by the company.
Attracts Talent
In the case of companies its employees play a major role in taking a company to newer heights and when a company is growing talented people from competitor companies as well as other companies like to join the company as they too are looking for growth which in turn ensures that the company has plenty of options when looking for new talent and using that talent to grow further. In simple words company that is showing growth acts like a magnet, just like a magnet attracts everything towards it in the same way a company showing business growth attracts talent.
Disadvantages of Business Growth
Pressure on Limited Resources
The biggest drawback of business growth is that it puts undue pressure on limited resources available with the company, so for example when your kid is small you need a small bed but when he or she grows up than that small bed will be of no use in the same way resources which are needed to run a small company will not be able to run which has grown in size due to business growth and hence whether its men, machine or capital all have their limitations and hence they will crumble under pressure due to work overload.
Comprise on Quality
Another problem with business growth is that when the company grows too fast then chances are that in order to meet the growing demand for its products it will comprise on the quality of products which in turn will lead to the company giving substandard products to its customers leading to a dissatisfied customer which in the long run will haunt the company for many years. In simple words, it is easy to bring back the dead person to life than bringing a dissatisfied customer back to using the company’s products and that is the reason why great companies never comprise on the quality of their product or service.
Unsustainable
Growth is not something which will keep on happening every time and history is filled with examples where companies that grew very fast came down also swiftly and that is the reason why companies showing business growth should aim to keep their growth constant but sustainable rather than aiming for extraordinary growth which is unsustainable.
As one can see from the above that business growth has pros but at the same time if the company is not prepared to handle too much growth it can prove to a disaster for the company and that is the reason why any company should keep growing but not at that pace which it cannot sustain in the long term.