Should SMEs keep growing?

Having invested a huge amount of your time and energy over the years to create a successful business, you can see the potential to grow it to the next level.

However, you may be pulled between the potential of increasing the value of your business and the risk of running out of cash as you invest and make changes to grow. 

You may wonder whether the only option is to grow.

Situations where growth is not essential

After all, some SMEs survive without significant growth when for example: -

• The business serves a specialised niche market and can survive by focusing exclusively on that niche.
• The business is focussed on maintaining low overheads to keep costs down and remain viable with modest revenue. 
• The business survives on repeat business rather than new customers and has a small but very loyal customer base that provides ongoing revenue. 
• The business has seasonal revenue cycles and can survive periods of low revenue by cutting back and waiting for high seasons. 
• The aim of the business is simply to provide income to support the owner’s lifestyle. 

Benefits of growing your business

However, lack of growth can make SMEs vulnerable.  Issues like

• Changes in market requirements
• New competitors
• Loss of key employees
• Economic downturns 

can threaten the survival of SMEs that are not growing. 

Growth is generally needed for long-term sustainability. 

Here are some of the key reasons:

Economies of scale

As SMEs grow, they can benefit from economies of scale, reducing costs and improving efficiency through larger volumes and purchasing power.  

This makes them more competitive. 

Diversification of products or services

A larger customer base and diversified revenues can help SMEs weather downturns and shocks in the market.  

This makes them more resilient. 

Building a stronger market presence

As they grow, SMEs gain more visibility and establish a stronger reputation in their industry. 

This can improve branding and position them as leaders. 

Increased resources for innovation

Growth places pressure on SMEs to innovate and improve to continue expanding.  

This leads to more competitive products, services and processes. 

Easier access to finance

Growth provides access to more financial capital and resources.  

This allows SMEs to improve capabilities and operations. 

Strategic and sustainable growth allows SMEs to unlock their potential, provide more value to customers, and strengthen their positions in their industry.

Conversely, stagnation often leads to decline in the long-term. 

Helping you

I work with overstretched leaders of Engineering SMEs to help them prepare their business so they can achieve profitable growth. 

If you would like to explore how I could help you, please use the link below to book a free 30-minute conversation.

http://tinyurl.com/HerveJardonCalendar