Why Your Start-Up Stopped Growing
Slowdowns are inevitable, but to get through those slumps, you've got to know what's behind them, says Ron Ashkenas, managing partner of Shaffer Consulting, in The Harvard Business Review.
Here are three signs you've been stunted:
The law of large numbers. "As a company gets bigger, each percentage of incremental revenue suddenly represents a fundamentally larger number," says Ashkenas. There's also more pressure on the sales team to find new markets, categories, and geographies.
Market maturity. As a market moves through its life cycle, it becomes more crowded, prices stabilize, and the opportunity to grow through price increases, well, decreases. When a market gets saturated, it becomes that much harder to lure away buyers who are loyal to particular brands.
Psychological self-protection. Innovation is hard. So it's no suprise that rather than take a risk with a new product, many companies succumb to the pressure to preserve the base business and focus on "adapting existing products and services," says Ashkenas. Sadly, playing it safe leaves the door wide open for disruptive competitors.
There are two ways to keep up the growth, he continues:
Regularly re-examine your business model. "Don't limit your innovation and research to the development of new products and services, but also focus on the possibility of new business models," says Ashkenas.
Next, consider downsizing. Are all your products producing sufficient returns? Would you be better off shedding some customers? Acting on the answers "can liberate you and your resources to focus on new opportunities and will lead to more growth in the long term," he says.
JANA KASPERKEVIC | Staff Writer
Jana Kasperkevic is a graduate of Baruch College, City University of New York, where she earned a bachelors degree in Journalism and Political Science. She covers start-ups, small businesses, and entrepreneurship for Inc. Her work has appeared in The Village Voice, InvestmentNews, Business Insider, and Houston Chronicle, among others. She lives in Brooklyn.