Thanks to all those who either commented on my previous blog or emailed me with their feedback and suggestions! Many of you asked about the phenomenon of growth in enterprises, and encouraged me to write about ‘how to grow a small business’.
There’s no doubt that one of the main objectives of any entrepreneur is to have their enterprise grow and expand. To achieve this it is very important to understand the factors that contribute to the growth.
There is a general consensus that growth in enterprises is a complex process, which is neither linearly continuous nor dependent upon only a limited number of factors. Availability of financial, human, and social resources; technical and management skills that can adapt to and cope up with a changing environment; the potential to develop staff; and creativity and opportunity recognition are some of the key factors to determine the growth of enterprises.
To better understand these factors, one can divide these into two types. Characteristics such as behaviour, personality, attitude ; their capabilities, including education and training that create higher expectations in some industry sectors ; and their social capital which influences access to resources. One can also include management experience, family history, functional skills, and relevant business sector knowledge. Although none of these can be said to give a universal success recipe.
The second category of factors influencing business growth is the business itself in terms of its structure and goals, the performance of its management, in particular their ability to make rational decisions about its operation.
Apart from these two categories some external factors also have an effect on business growth. These are cultural, political, and economic conditions of a country or region.The triggers for enterprise growth are found along a continuum from inborn attributes of individuals to complex interrelationships amongst often changing cultural, political and economic conditions at national, regional and regional and local levels. Location is another factor. Variation in size, scope and buoyancy of demand in local markets is likely to affect growth opportunities. On the supply side, variation in the cost and availability of labour, premises and services is also influential. Nevertheless, small businesses are often adaptable, employing different strategies to deal with these local variables so that their impact is minimised.
Just having a growth orientation does not guarantee growth rather the owner should be committed to expansion. A business set up to exploit an identified market opportunity would therefore be expected to have stronger growth orientation than one set up as a result of ‘push’ factors such as a lack of alternative opportunities. In a nutshell it is important to identify the factors most relevant to the business and then exploit them to expand and grow the enterprise.