If There's a Will . . . Simply having a desire won't cut it if you want to make your dream of business expansion a reality.
By David Newton
Opinions expressed by Entrepreneur contributors are their own.
Entrepreneurship is all about growing your business, right? Butresearch indicates there's a huge difference betweenentrepreneurs wanting to grow and actually being able to grow. In"Small Business Growth: Intention, Ability andOpportunity" (Journal of Small Business Management,Volume 41, Issue 4), Alison Morrison, John Breen and Shameem Aliexamined more than 400 small, growing companies and found thatalmost 90 percent of the firms expressed a desire to grow and werehighly confident they could do so. But when these intentions werecompared to actual company performance, the ability to deliver thegrowth was unrelated to the desire.
Only 1 in 6 firms was growing faster than its industry, while afull quarter were growing at a slower rate. The same trend heldtrue for two other growth-oriented standards: sales turnover(one-quarter showed no growth or a decrease; less than one-fifthexperienced double-digit growth) and employment growth (4 out of 5reported a decrease or no change). The lack of growth wasoverwhelmingly blamed on poor managerial expertise (83 percent saidthis hindered their ability to grow), inadequate technology (79percent), not having the right mix of employees (76 percent),undeveloped business systems (76 percent), and financiallimitations (72 percent).
The authors defined the opportunity for growth by marketconditions, access to funding, some form of public sectorregulation and the labor market. But without the internal abilityto make growth happen, even firms with good opportunities missedout on growth. Intentions and abilities have to be matched to theopportunities; otherwise, the entrepreneur's efforts are fornaught.
A targeted growth strategy outlined in a formal business planwas consistently one of the best internal attributes of firms thatexperienced solid growth in sales turnover and employment. Makesure you have the capabilities in place, because your strong desireto grow-in and of itself-isn't enough to expandyour company's performance.
David Newton is a professor of entrepreneurial finance atWestmont College in Santa Barbara. For more journal summaries,visit www.techknowledgepoint.com.
