Why Businesses Reach A Plateau & Stop Growing

Most small businesses experience phenomenal growth in their first 3 to 5 years. These are exciting times to be part of an SME, with a seemingly limitless capacity for expansion and new contracts rolling through the door. However, this initial burst of expansion cannot last indefinitely. A business will inevitably come across one, two or three hurdles that slow and then stop their growth. These are related to the three broad functions of a business; Operations, Finance and Marketing.

Operational Capacity

The operations function of a business involves getting the job done; the nuts and bolts task of providing a service for your customers. This is the main focus of any business and most companies are pretty good at it. A business may stop growing when the service providers simply have too much work on their hands. There are only so many working hours in the day, and a team that regularly takes on too much will eventually become burned-out and unmotivated. There is therefore a limit to how much work can be taken on, even if potential new customers are queueing at the door to take on your service.

Finance & Administrative Support

The finance function encompasses the back-office of a company. This involves accounting, invoicing and internal admin, such as maintaining a CRM or group of spreadsheets. Without the support of a good finance and admin department, a company will soon start slowing down. The increased administrative burden of taking on new work will detract from a business’s operational capacity, reducing its ability to take on new contracts. This logic applies even if the marketing/sales team is busy bringing in new leads and the operational team have time available (in theory) to service new customers.

Marketing & Sales

The marketing and sales team are there to bring in new business. The most common reason for a business to slow down and stop growing is because the leads stop coming in. This says nothing about the market demand for a company’s products, which may be very high. It is simply the case that the target market do not know about the business, or there is insufficient time available to follow up and convert leads.

Living On The Plateau: How to Deal With A Business Slowdown

A business may find that growth slows down for one of these reasons, but it is usually a combination. A slowdown after initial expansion is a natural part of every business cycle. The important thing is how a business responds. Most businesses content themselves with being on the plateau. They find an equilibrium with their existing clients and do not actively take on new work. There is nothing wrong with this approach, although it is not usually stable. Change is a constant in business – employees leave, prices rise, new technologies change your market, suppliers and clients go bust or take their business elsewhere. A business that has become comfortable on the plateau and lets its marketing function wither away may find itself in trouble when faced with an unexpected change.

The second approach is to actively seek to kick start growth again. This will involve investment in the side of your business which has reached capacity. For instance, you may need to take on more front-end staff to fulfil customer orders, or streamline your back-office systems so the admin is not so time-consuming. Or you may need to invest in sales and marketing.

Investing In Sales & Marketing

Investing in your marketing function does not necessarily mean taking on new employees. For many SMEs this is an expensive and risky option, and doesn’t always bring in the best results. You may want to consider talking with a business growth agency such as ourselves. We offer a range of flexible marketing and sales services that help accentuate the strengths of your marketing function while allowing you to expand in a way that meets your operational capacity. No two businesses are the same and not every company needs or desires stratospheric growth.

The key is to develop a bespoke approach that meets the genuine needs of your business and gives you the best possible market share for your product or service. Feel free to get in touch with one of our growth specialists for a no obligation chat and find out more. You may be surprised how affordable it is to reinvigorate your growth plan and get your business expanding again.