Why business growth and quality don’t always align

Achieving growth while maintaining quality customers is a goal many business owners aim to achieve. On the one hand, some customers are willing to pay a premium for a product or service of higher quality, while others are more sensitive to cost and may not see the value in something higher priced. A business can build brand equity with some of these customers who seek out superior products and services, and thereby create a loyal customer base, resulting in a  stream of new business

However, consistently delivering on expectations to these customers may mean higher costs on behalf of the business and could result in a slower growth trajectory. Nevertheless, for any business owner, it will be a balancing act between operational and strategic goals that yields success. 

Balancing Quality and Growth

When considering growth objectives, one must consider what your growth goals are and how you want to get there. Businesses can take a myriad of approaches, but let’s look at a couple of scenarios many people may find themselves in at one point. 

For those businesses that want an accelerated growth trajectory, one could achieve growth goals faster and with higher returns. However, it can open the company up to several risks. For instance, as teams are rapidly moving to meet increasing product demand, it’s easy to make mistakes.

On the other hand, a slow and steady path to growth isn’t without potential pitfalls either. Secure in the growing demand for a product or service, businesses may fail to innovate or be able to adapt for future market changes. 

When considering a growth horizon, it’s important to consider your exit plan. Are you growing with the expectation for a merger or acquisition? Do you plan to pass your business on to a family member or are you considering an ESOP? Aligning these goals with your growth goals is a key strategy for the business and its success.

Next, don’t lose sight of the needs and wants of your customers. Trying to be all things to all people can muddy the market differentiation you have.

Additionally, consider your capacity to handle growth and whether you can support current standards of quality. If you have enough on your plate, adding more could carry reputational risk if quality declines. You also need to consider if you can financially manage additional growth. Realize that it’s okay to say no to taking on new customers if the financial and operational health of your company could be at stake.

Finally, don’t be so married to reaching only the upper echelons of quality that you miss out on good profitable business. If your goal is to maintain a 40% gross profit margin, but 35% may be more feasible—that’s still a healthy margin and a quality offering. 

When seeking growth and quality, the bottom line is balance. Find a good middle ground where modest but profitable growth is possible and seek to maintain current customers while adding new. 

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