Home Entrepreneurship Why business growth stalls, and what you should do.

Why business growth stalls, and what you should do.

business growth stalling

It is one thing to start a business; it is another thing to grow a business. For me, the exciting part about growing a business is the ups ‘n’ downs.

There are periods when the world seems like a great place, and there comes that phase of your business journey when you just want to hide in a hole. That happens when your business growth stalls. I have been there. You would hardly find an entrepreneur who has not been in that situation. Infact, 87% of Fortune 500 companies have stalled at least once. 

Let me put this into perspective, business growth stalling is a phase where your business model won’t be able to deal with new market realities and revenue drops.

To make matters worse, it doesn’t come up abruptly. It is a gradual thing. And If you are not investing in R&D or paying close attention to research-based marketplace insights, you might miss it.

Have you ever wondered why some businesses fold up due to their growth stalling? It’s because by the time it fully sets in, they are not prepared for it. They didn’t see it coming. 

In my interaction with other business owners, I realised that two factors are responsible for growth stalling: internal and external factors.

Let me start with the latter; external factors arise from regulatory actions and economic downturns. You also want to look at macroeconomics factors in general and then, act of God. But then, all of these factors account for only 13% of the reasons business growth stalls.

Now, let’s talk about the internal factors itself. The main culprit.

Internal factors account for 87% of why business growth stalls: from exhausting your market and channels. For most businesses, it is usually that they have exhausted their channels and gotten to the limits of their distribution or acquisition channels.

But then, would these channels not eventually get exhausted?

Of course, they would. When you have a successful channel, you will definitely have your competitors leveraging this same channel. This will increase your acquisition cost, rendering the channel no longer effective and exhausted. 

At this point, what do you want to do?

Figure out new channels!

You want to figure out new channels to satisfy how your customers want to be reached. And this is very important in bringing a unique value proposition to the market.

Think about this, if you have been solely leveraging physical channels, you want to try out virtual channels this time. As a matter of fact, a mix of both channels won’t be a bad idea for you to try.

There is one more thing.

You should also talk to your customers and explore and strategize about the best possible ways to get your product to them. You don’t want to joke with requesting feedback. 

Remember Phillip Morris (producer of Marlboro cigarettes)? Although, they are now part of Altria. They failed to respond to the growth stall. Instead, they kept relying on the higher margins in their performance metrics. They didn’t take into cognizance that growth stalling is a gradual thing.

Another stark example is Levi Strauss. Gordon Shank, CMO of Levi Strauss, an American Clothing Company, sorrowfully admitted,

“We didn’t read the signs that all was not well; we were in denial.”

This was when the brand relationships with their distributors faltered between 1995 through 1999. 

All of these events remind me of a section in Clayton M. Christensen’s The Innovator’s Dilemma, where he talked about a cycle of denial that kept management boards from responding to market fluxes.

As an entrepreneur, you have to respond immediately. If you fail to respond to competitive challenges or a shift in customers’ perception and valuation of your products as an entrepreneur, then you should expect your business to fizzle out. It’s not rocket science.

On the other hand, if you have not exhausted your channels, then you’ve exhausted your market. By the way, this applies majorly to businesses that started with a very niche market. The funny thing is most successful startups find themselves here.

A vivid example is how Facebook focused on college students in the initial phase. When they exhausted the college student market pretty quickly, they expanded. This is what is expected of you as an entrepreneur.

You want to look beyond your niche into similar ones and expand as quickly as possible to find new markets. This takes a disciplined process and requires a well-thought-out strategy.

Let’s put this into perspective, you want to review your business model, research competitors’ markets, establish a unique value proposition, work with feedback, get a working budget, and set a timeframe to drive the expansion.

As a nascent entrepreneur, execution is everything, and this is one thing you want to deliver justly.



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