Fast or Slow? Arguments for & Against Rapid Business Growth

What’s your speed — fast, slow, or somewhere in the middle? If you’re trying to get a business off the ground, this isn’t an idle question. You need to decide whether you want to grow your company quickly, opt for the slow and steady approach, or split the difference. Let’s weigh three common arguments for the two extremes.

Why Grow Slow? 3 Reasons to Take It Easy

  • Your Tax Bill Could Rise Faster Than You Realize: Back in the Internet’s Wild West days, you could easily get away with selling merchandise across state lines — as many as you pleased — and not paying a cent of sales tax. For better or worse, those days are over. If you decide to open a store in a new jurisdiction, you need to make sure you’re forking over your fair share to the local tax authorities. That’s doubly true in international markets, where value-added taxes (VATs) are often the norm.
  • You Could Bite Off More Than You Can Chew: Managing a 10-person company is lot different than managing a 100-person company — and a heck of a lot different than managing a 1,000-person company. You might be great at envisioning and developing killer products that your customers can’t get enough of. That’ll get you through your company’s “death phase,” but it might not be any good once you’ve got several layers of middle management between you and the front lines. If you grow faster than you can grow into your new (and constantly changing) role as company leader, you’re likely to reach a point at which you’re doing more harm than good.
  • You Could Cede More Control Than You’re Comfortable Losing: Rapid growth often comes at a price: less control over decision-making and direction-setting at the top. Once you have a board to answer to and investors to keep happy, you’re no longer the boss — or, at least, not the sole boss. That’s a tough change to manage.

Why Grow Fast? 3 Reasons to Get a Move On

  • You Could Lose Out on Talent & Investment: Investors love winners. So do talented workers. Even if your slow-growing company is financially stable and executing its business plan to a ‘T’, you can’t expect prospective employees or stakeholders to understand that. Rapid growth is sexy, and sexy sells.
  • You Could Sacrifice Market Share for Stability: In emerging industries, market share is more important than any other financial metric: revenue, profit, margins, you name it. The more market share you’re able to grab right out of the gate, the stronger you’ll be when you finally figure out how to turn a profit. Slow growth might mean stability, but it could also foreclose opportunities down the line.
  • You Could Find Your Way to the Door Faster: If you’re a restless founder, you don’t want to be tied to your startup for a decade or longer. Rapid growth breeds more (and more timely) opportunities to exit, either by selling your stake outright and reinvesting in a new company or stepping back and handing day-to-day operations to a trusted subordinate.

What’s your business growth philosophy: tortoise, hare, or somewhere right in the middle?

 

Scott Vollero is an international entrepreneur and expert in the precious metals and automotive parts recycling industries.