I’ve spent the past 20 years growing businesses; my own, as well as coaching & mentoring thousands of other people to start and grow theirs. I’ve witnessed incredible successes and spectacular failures along the way. There are many reasons some small companies grow and others don’t. There are external factors like market size, competition and demand. And internal factors; to do with human performance – leadership and operations. In every industry, there are companies that grow and dominate, while others stagnate or shrink and ultimately fail. I am frequently asked why so many businesses fail to grow. This post focuses on some of the key reasons; in my opinion, why businesses fail to grow.

1. Lack of ambition. How driven is the business owner to grow? A small company is usually a reflection of the owner’s wants, desires, needs and personality. Businesses are set up for many reasons. Some for lifestyle purposes to have more flexibility and spend more time playing golf, tennis, or spend more time with their kids. Some owners are super ambitious and want to build a high performance business, an empire and others are happy making a living to pay the bills and live life on their terms. There’s absolutely nothing wrong with that — it can however impact the rate of growth and explain that some businesses are designed to stay small.

2. Business owner error. This is probably the number one reason why so many small businesses fail to grow. As an entrepreneur you need to wear many hats and be responsible for all aspects of your business including: sales & business development, marketing, HR & talent management, finances, operations, IT. Many struggle wearing all hats and tend to focus on the think they like as opposed to critical drivers for the business. They find it difficult to multi task; juggle numerous things and not drop the ball. Business is a long distant sport and is not for th feint hearted. You need to be 100 per cent committed and nothing less. Take the good days with the bad days and dust yourself down and pick yourself up time and time again.   Many business owners don’t have the stomach for it in the long term.

3. Hiring the wrong people. Having the right people is paramount to the growth & success of your business. You cannot build a great company without the right people. Hiring the wrong people can be expensive and impact the rate of growth of your business. This requires a skilled hiring strategy and the courage to make the changes that are necessary as the company grows. This is easier said than done — especially when it turns out that people who were “right” at the beginning are no longer “right” in their roles as the company grows. Many business owners believe they can’t attract great talent based on their size and the salary they are offering and ‘settle’ with the people they hire.

4. Poor leadership skills. Many business owners are inexperienced leaders. Inexperienced leaders will find it difficult to attract and retain the very best talent and will find it difficul to truly motivate their team and bring out the best in them.  If a business owner is unable to build a high performing team and share his / her overall vision and direction for the business; it’s difficult to inspire, encourage, motivate and support people to go all out for you. An uninspired team will underperform and adversely impact your bottom line. .

5. Growth strategies & infrastructure. Many business owners lack clarity on where their business is at and more importantly where it’s going. They don’t have clearly defined growth strategies, or clear business and revenue models to build scale. Without the right infrastructure in place having the right systems, procedures, processes, controls and overall quality in the business, it will stand still. .

6. Fans not customers. The very best businesses keep abreast of market changes and continue to delight their customers with new products and services and provide top notch customer services; making their customers huge fans; encouraging loyalty. If the business owner doesn’t share the same values for championing the customer and giving them the white glove treatment; it’s likely customer retention will be low. 

7. Technology. Many small businesses fail to invest in technology making it difficult to have instant access to much needed information to run a successful business. They don’t have access to customer lists which prevents them from making contact with and analysing trends. They don’t have real time information on their finances. With the lack of accounting systems they don’t have an up to date cash position. Technology can be expensive so small businesses often stick to excel which can be limited in what it can provide in comparison to what else is available on the market today.

8. Marketing. This is one of the biggest challenges that small businesses face today and perhaps a key reason why businesses fail to grow. Many business owners don’t understand marketing and what it is and its importance to their business. They’re not clear on their brand, brand values or their target audience making it difficult to engage the customer and laser target marketing initiatives to speak to them directly. The businesses that truly understand marketing will continue to attract new customers and will flourish and the ones that don’t wont. .

9. Doing the same thing expecting a different result. Whether you are talking about products or services, the market is always changing, and your products and services have to change with it. A lack of foresight and planning and innovation makes the company stand still. Sometimes changes in a market are slow and subtle; sometimes, they are instant and dramatic leaving many businesses exposed.

10. Lack of investment. Whether it’s for new technology, larger office space, more employees or equipment, growing companies require more cash than non-growing companies. Many business owners don’t know how to go about finding investment for their business. Getting this cash may require borrowing money, finding more investors or using up whatever cash is on hand.  Some entrepreneurs opt to run with what they have and try to grow incrementally year on year which takes longer to achieve growth than perhaps an injection of capital would do to the business. .

11. Living too close to the line. Many entrepreneurs spend too much of their company profits without thinking of reinvesting it to build a bigger, better, stronger business. They therefore have limited funds to invest in new products and services and to provide funds to develop a robust  marketing campaign leaving them cash strapped and under immense pressure to keep costs low for core business activity.


One Response to Why Small Businesses Fail to Grow?

  • Good site you’ve got here.. It’s diffiicult to find quality writing like yours these days.
    I seriously appreciate individuwls like you! Take care!!

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About Helen

Helen Roberts is a gifted leader, a popular trainer at live events, a coach and a mentor. Her fast-paced, authentic style, her incredible energy and passion will not only inspire you, you will be empowered knowing you can overcome your personal obstacles to be the best that you can be and live an incredible life!

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