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You’re either growing market share or losing market share.
It’s just a fact of life in the business world.
As wonderful as it is to think about, a market where stable profits continue indefinitely simply does not exist.
Competition is fierce. The challenges are many.
Without ongoing due diligence directed at identifying and mitigating these threats, business growth is sure to stagnate and eventually decline.
At businesspartnermagazine.com, we are passionate about connecting entrepreneurs and business leaders with expert insights to help businesses identify strategies and solutions to get back on the path of sustainable growth.
With this in mind, keep reading as we explore some of the most pertinent threats to business growth and provide best practices for how to make ongoing growth attainable.
Common Reasons for Stalled Growth
A growth plateau can occur due to a variety of internal and external factors. Many threats are tied to the macro-economy and should be readily apparent to the business. Others are more subtle and can take the firm by surprise without the proper due diligence. Let’s take a look at a few of the most common drivers of stalled growth for modern businesses.
Market Shifts
Market shifts can erode established demand patterns. They can cause foundational revenue streams to evaporate. A few of the most pertinent drivers of market shifts include:
- Evolving consumer preferences
- Technological innovations
- Emerging competition
On a macro scale, economic downturns and a shift in global trade policy may affect the purchasing power of consumers.
When businesses fail to account for these types of market shifts, their profitability suffers.
Outdated Operations
“If you’re not constantly evolving, you’re going to learn a quick and painful lesson from someone who is.”
Often attributed to Olympic wrestling champion Cael Sanderson, this pithy statement carries particular weight when explaining stalled business growth.
Namely, in the realm of operations, the day-to-day can’t be the day-to-forever. It is crucial to constantly perform internal audits. Regularly assess the competitive landscape. Use your findings to make adjustments that align with current best practices.
If not, the results will not be pretty.
Decreased efficiency. Rising operational costs. Competitors doing the same thing better. They are all threats to stall growth in a dynamic, highly competitive marketplace.
Financial Mismanagement
It takes money to make money.
That’s Entrepreneurship 101.
Unsurprisingly, when cash flow challenges arise, growth prospects falter.
Limited ability to invest in new opportunities. Lack of funding for employee training/upskilling. A reduction in marketing.
All of these issues directly impact company performance and cause growth to cease.
What’s more: these can often snowball out of control. Poor financial forecasting can cause the company to take on more debt. It may be tempted to misallocate existing funds as bandaid measures. Ultimately, the inconsistent financial performance will erode investor confidence. This will permanently threaten the long-term prospects of the firm.
Getting Back on Track When Growth Stagnates
If your firm is experiencing a growth plateau, you’re not alone. Statistics indicate that some 70% of businesses will experience growth challenges after their first five years of operations. Fortunately, there are a variety of strategies the business can incorporate to reclaim declining market share.
Shore Up the Cash Flow
Stabilizing cash flow is often the first step in a focused turnaround strategy. Before growth can recommence, a firm must regain control of its cash position. This can happen by:
- Tightening working capital
- Renegotiating payment terms
- Identifying non-essential spending
Locking down cash flows will improve liquidity for daily operations. It will help the company minimize expensive debt. It will put the firm in a better position to act on investment and expansion opportunities.
Align Leadership
Two steps forward, one step back.
How about 100 steps forward, 99 steps back?
This is what it feels like when growth becomes stagnant.
However, without aligned leadership, the feeling is par for the course. Constantly dealing with discordant ideas at the top. Adapting to fragmented company policies. Operating with no clear sense of direction. Each of these leadership pitfalls is sure to undermine growth.
By getting leadership aligned behind a single, strategic vision, the company will experience enhanced collaboration, faster decision making, and stronger accountability.
Invest in Innovation
Adopting innovation allows the business to remain adaptable in ever-changing markets. Automation can limit cost challenges associated with repetitive administrative tasks. This frees up team members to focus on more high-value projects. AI tools can leverage machine learning to predict customer behavior for more accurate financial forecasts. Data-driven analytics can streamline operations, potentially reducing costs related to wasteful inventory and staffing protocols.
Use the Latest Tools and Technology for Ongoing Business Growth
If growth were a guarantee, everyone would be a successful entrepreneur. Unfortunately, there are some ever-present threats that business owners must navigate to keep growth steady. By using the latest tools and technology, entrepreneurs can successfully turn their stagnating company around and enjoy growth in a competitive market. For more of the latest trends in business and entrepreneurship, explore the content at Business Partner Magazine for additional thought leadership!
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