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Fast Growth or Consistent Growth?

We take a look at whether fast growth always trumps consistent growth

13Nov

Most parents tell their children that growing up too fast and failing to take advantage of a time where responsibility isn't present will fill them with regret when they're older. For most kids however, the notion of responsibility is appealing, it brings respect, money and in their minds, a ticket to adulthood.

The desire 'to grow up too quickly' is something that companies have to fight with continually. Rapid growth is difficult to reject, it brings big profits and a promise of a bright future, but companies banging on the drum of rapid growth shouldn't always be taken at face value. Often, they're a risky business and involve heavy investments with little promise of long term financial return.

Companies that put an emphasis on rapid growth have often had to rely on M+A investment. External investment is sometimes a necessary evil, but if a major proportion of a company's capital is tied up in external pockets, there's a good chance that the founders of the company won't have such an influential say in how the company operates. This often leads to a loss of the company's original vision and a lack of agility.

Additionally, companies that expand too fast often don't have the experience to know when a market is slowing down, they instead try and expand when there's no room for expansion. This is often a symptom of growing too fast and can be a detrimental to a company's ability to grow year on year.

Growing organically ensures that any success you're achieving, you're achieving through your own devices. Of course, a happy medium has to negotiated, especially at the startup stage as investment is commonly needed to get an idea off the ground, but it shouldn't be a philosophy that a company religiously adheres to.

A company that pursues growth at the cost of its sustainability will almost always be met with the same negative fate so it's important that a compromise is achieved between organic growth and external investments.

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