97 Reasons Why Business Growth Stalls

Growth is hard work.  For the past 27 years, I’ve worked as an executive coach, Vistage Chair, trainer or management consultant with hundreds of organizations. They have varied in size from just under $1M to well over $1B. Some have grown aggressively while some have grown more methodically, and others have struggled to grow at all. I find that every organization, at various points in its life cycle, hit ceilings where they get stuck and struggle getting to the next level. And, the higher the expectations, the harder it gets.

It often takes leadership self-reflection, a major change in focus, a significant upgrade in a functional area, or some radical action to breakthrough a ceiling.  When you are a smaller business,  it could be just one major thing.  As your grow, it usually is  combination of interrelated issues.  I’ve compiled the following list of reasons why companies end up hitting a growth ceiling or slowing down their growth trajectory.

Leadership Reasons

1. no real leader passion for growth; unwillingness to walk the talk
2. scattered or inconsistent leadership focus
3. insular leadership teams; circle is too small
4. too much hierarchy
5. risk aversion
6. poor coordination and collaboration amongst leadership team
7. leadership meetings that are more about reporting than problem solving or opportunity identification
8. not enough constructive conflict around important decisions
9. leaders not fully understanding what drives value in the business
10. one way leadership communication
11. Incurious or minimally informed key leadership personnel
12. leader and/or manager disinterest in upward feedback
13. not seeing the organizational chart as a living document
14. lack of clarity on what success means that both the macro and micro level
15. leaders acting like managers rather than leaders
16. organizational culture is an afterthought
17. comfort becomes the enemy of progress
18. an unwillingness to confront harsh business realities; too much happy talk and then unwillingness to communicate bad news
19. a leader that doesn’t personally invest in his/her own professional development and that of his/her key leadership staff.

Strategic Reasons

20. forgetting the Basics: Vision, Mission, Values
21. strategic planning seen as an event rather than management tool
22. not being in touch with external market realities, e.g., industry and market trends
23. no strategic decision-making filters
24. limited or no focus on competitor intelligence
25. lack of client and/or product diversification
26. too slow to adjust or pivot based on external market realities
27. riding industry coattails rather than creating true competitive advantage
28. minimal or no investment in R&D and innovation
29. treating assumptions as facts
30. limited or no data analytics
31. thinking that what got you here will get you where you’re going

Business Development/Sales Reasons

32. not fully understanding or leveraging your client value proposition
33. underinvestment in business development
34. reactive versus proactive business development (inbound vs. outbound)
35. limited or ineffective sales management efforts
36. hiring salespeople on the cheap; underpaying for sales talent
37. not understanding the ROI of marketing initiatives; trusting rather than validating the advice of outside experts
38. insufficient attention to upselling efforts
39. being too optimistic about sales pipeline close rates
40. poorly functioning or unused CRM system
41. sticking with clients out of loyalty rather than business benefit
42. not enough two-way communication with clients regarding service needs and product/service innovations

Operations Reasons

43. lack of a coherent and consistent management philosophy
44. minimal or no management reporting systems in place to ensure accountability
45. too much reliance on too few people
46. management span of control issues
47. Focusing on the wrong Key Performance Indicator’s (KPIs) or having none at all
48. sporadic and inconsistent manager performance
49. a mindset of micromanagement versus empowerment
50. getting too process happy; thwarting individual initiative
51. poor quality control
52. not pushing back on client scope creep
53. throwing bodies at problems versus thinking through solutions carefully
54. lack of innovation to spur productivity
55. lack of debriefing success and/or failure
56. organization stops being easy to do business with internally and externally
57. lack of operational redundancy; single point of failure issues
58. minimal or no emphasis on succession planning
59. minimal or no focus on knowledge management; lack of a learning management system
60. Resisting digital transformation

Financial Management Reasons

61. stressing the organization from the “inside out” rather than “outside in”; too much overhead and not enough sales; costs driving sales needs versus sales needs driving costs
62. not having a plan in place for different financial scenarios an using specific budgetary triggers that drive action.
63. use of static versus flex budgeting or no budget at all
64. poor cash flow management
65. not enough working capital
66. poor backlog/WIP management
67. too much or the wrong type of debt
68. too small of a Line of Credit (LOC) based on the size of the business
69. poor communication with bank when there are financial problems
70. lack of financial sophistication: Internally or externally
71. not using forecasting tools
72. poor estimating and/or pricing
73. too slow to react to significant A/R issues; letting the amount owed get too big.
74. minimal or no financial controls
75. not enough attention placed on risk management; lacking the right business protection
76. lack of financial literacy at all levels of the organization
77. self-created tax problems
78. prioritizing owner lifestyle needs over business investment needs; owner treating business like personal ATM

HR Reasons

79. not properly leveraging or investing in the HR function
80. overreliance on hybrid positions rather than committing to specialization
81. underperforming recruiting function; it takes too long to fill vacant positions
82. hiring fast and firing slow
83. wrong people wrong seats, right people wrong seats, right seats wrong people
84. not paying enough for talent
85. minimal or no incentive compensation below leadership level
86. insufficient or no professional development for supervisors and managers
87. flawed performance management process
88. insufficient attention to employee morale
89. high employee turnover
90. poor employee onboarding process
91. letting labor attorneys run your business rather than actively dealing with performance issues

Other:

92. different rules for family members and friends
93. penalizing mistakes rather than learning from them
94. win-lose versus win-win stakeholder relationships
95. No mechanisms in place to ensure that truth speaks to power
96. valuing tenure over competence
97. Growth needs of the organization excess the growth capabilities of existing staff