Growth: Better, Not Bigger is the Goal

Surveys of Black suppliers consistently show that they view their major business challenge as lack of capital. While this may be true, a recent study by McKinsey and Company suggests that their potential corporate customers view Black Suppliers' major business challenge to be their lack of scale. “Black owned businesses are overrepresented in low-growth, low-revenue industries.”  Even when this is not the case, and even when they might have a superior product or service, or favorable price, they often lack the operational capacity and risk mitigating capabilities to serve as Tier One suppliers. Thus, the primary goal of Black suppliers who have obtained product-market fit should be to achieve accelerated growth {This is certainly the goal of the National Black Supplier Development Program for the suppliers in its program}.

In the human life cycle personal growth implies being better, more mature, and more capable, and not just getting older or physically larger. Personal growth implies being better for the world and not just doing better in the world. An analogy can be made with business growth. The essence of business growth is not an increase in revenues or profits or years in operation. The essence of business growth is an expansion of capacity, a broadening and deepening of capabilities, and better leveraging of resources resulting in a greater market impact and achievement of goals. Business growth is defined by the company’s ability to cope with whatever competitive or environmental challenges it encounters, and the value it adds when the world encounters it.

It is safe to say that every company wants to grow, but it is also true that not every company is prepared for growth at a given point in time. There is a significant difference between a business plan, a growth plan, and even a strategic plan. A business plan typically covers a three-to-five-year period and details a roadmap for how each of the functional areas of the business (marketing, productions, accounting, etcetera) will operate to achieve company goals. A growth plan typically covers a one-to-three-year period and identifies specific (customer, market, geography) growth opportunities, and justifies which of a finite set of growth strategies (penetration, market development, product development, diversification, or inorganic) it will pursue.

To be prepared for growth companies must meet certain 'growth' challenges or conditions. Once met, they can then take the first step in the growth planning process: establishing growth objective or objectives.

Establishing an objective or objectives in turn requires companies to determine: 

• the type of growth it wishes to pursue, and
• the magnitude of that growth. 

The type of growth and the magnitude of that growth sets the stage for a company's growth plan and frames its growth planning process. The next article in this series will address the types of growth.