I can assure that most (if not all) entrepreneurs start a small business with continuous business growth as their main goal.
Reaching that goal can be hard.
There are many challenges one has to face, and many questions one has to answer. One of them (that might give a headache to more than one) is:
I have the opportunity to grow fast, but that might diminish my product’s or service’s quality, what should I do?
Both business growth and product quality are indispensable and it calls for you to be smart and prudent to know the right time for each.
Quality or quantity? Tough Decision
Though focusing on quantity may bring instant gratification, it’s not all the time the wisest alternative to regularly look to as it might be short-lived.
Focusing on your products’ quality may keep your customers happy, but revenue might not grow and your business could remain stagnant.
You can see the dilemma, right?
Many start-up businesses are always thrilled by profitability and will grab any growth opportunity fast without having a second thought. After all, business growth is not necessarily a bad thing, as it would help you reach a larger number of customers that want or need your service or product. Some other times, business growth makes startups get into debt and lose clients.
So… what does this mean?
When you find yourself in such a tight spot, you should analyze the crucial reasons why and when you should consider business growth and when to opt for products’ quality.
Let’s look at an example:
Jane, the owner of a child care facility, recently experienced an increase in the number of kids being admitted into her facility. Even when the institution was full, she still had parents/guardians asking for a chance to admit their children.
Jane thought that this was her time to grow; the possibility of making more profit was right in front of her. However, this called for more renting space, additional staff, and buying materials to be used by the kids.
She had the opportunity to grow and this would not only bring her more money, but it also would allow her to help even more parents and their children. Seems like a no brainer, right?
But the thing is that it requires experienced and skilled staff to take care of kids, and Jane couldn’t find the right people for the job. It was a tricky situation. After thinking, again and again, she realized that admitting more kids wasn’t the right decision as at the time.
This might sound crazy, maybe other types of businesses wouldn’t end up being hurt by a slight diminishment in quality, but when it comes to children, it’d be irresponsible not to have the right staff.
What Jane did was for the good of the business as, in her line of work, the quality of the services shouldn’t be compromised.
Things are not so black and white sometimes, and they’re not straightforward either when it comes to businesses.
Remember, each situation is different, there might be businesses that have an easy time growing while others would rather not. Some businesses need to keep their quality intact, while some others might be able to compromise it a bit (without hurting customer satisfaction).
There is not a one-size-fits-all answer.
Let’s give a more in-depth look at the pros and cons of quality and business growth.
Quality over Quantity
For startup businesses (irrespective of the industry they’re in), the path to becoming successful could lie in producing the best quality products or offering the best services, in other words: quality over quantity.
Several entrepreneurs have the belief that focusing on business growth is what will make them successful. Well, that is not the case always. A large number of quantity customers might bring immediate fulfillment, but the quality is what will matter in the long-run. Quality wins the “quality over quantity” debate due to the following:
- Followers and sustainability – Producing quality products or services help a business make a mark on the market. In addition, it helps a business identify and serve its real customers (remember, a business is not only about numbers). For that reason, some businesses have to offer superior products/services to remain sustainable in the industry.
- Productivity – Planned strategies (like marketing strategies) not only focus on creating quantity traffic but also on creating quality leads that will boost the business. Therefore, a quality inclined strategy will yield results.
- Profits and revenue – Customers are always concerned about the quality of a product/service. A happy customer serves as “word of mouth” promotion for the business’s brand. Thus, it increases sales, which in turn boosts revenues.
- Customer satisfaction and loyalty–Satisfied customers will always give high rankings to your product or service. Therefore, a business can enjoy a wider customer base as they attract and keep more customers by producing and offering quality products and services.
The disadvantage of quality is that it takes time, it does not happen overnight. But consistently offering superior products and services will lead to success.
Growth over Quality
As a thriving entrepreneur or business owner experiencing a great revenue stream, it is natural to think of expanding your operations as well as growing your business.
Business growth can entail expanding:
- the product line
- target market
- operational structure
Although all of these carry inherent risk, not growing might mean remaining stagnant, which might have unfortunate outcomes.
Business growth can sometimes be seen as the bad guy because it may imply that the product’s quality could diminish. But growth should not be overlooked nor given the villain treatment.
Why is business growth important for your business?
Growth is good for any business as it helps take advantage of new opportunities, attract more customers and employ additional staff. Also, it expands your services or products, boosts sales and enhances market shares through helping you react to market demand.
Now, some businesses (not all) will have to compromise quality, it’s not out of the ordinary that growing means that owners can’t give as much attention to each product or service. That is normal, just look at any business that started small and now is a multinational business.
You have to be careful as to not compromise the quality so much that your product or service doesn’t meet the client’s needs. It’s a very thin line, but if you’re business savvy, you won’t have a hard time finding it.
Imagine you own a publishing house and you make top-of-the-line deluxe books, and suddenly a school asks you about one of your titles: they want to buy hundreds of them for their students. Now, you realize you can do business with this school and many others, but that they won’t buy your premium editions. So you decide to print a paperback version. Now, of course, there’s a decrease in the quality of the book, but this way you’ll be able to grow and help your books reach more people.
Growth has to happen for the right reasons and not just out of greed, if you do things correctly, growth will bring you more stability and profits. You just need to make sure you have enough funding to do so.
How can growth be of help to your business?
- Through diversification, growth can reduce commercial risks
- It leads to larger market dominance and mitigation of the competition
- It boosts the business’s capability to endure downturns and other market fluctuations
- Economies of scale help reduce costs
As we’ve said, sometimes growth can compromise quality due to increased production and loss of control, but as long as you delegate responsibilities, things will work out.
If things start going south and you start to lose too much control, maybe it’d be wise to take growth slower. After all, customer’s satisfaction always comes first, right?
Reaching a Compromise
Growth is both inevitable and necessary, but as time goes, expansion can hinder quality. Therefore, you should re-evaluate your business to know when to focus on the latter.
Don’t just focus on growth or on the quality of your products. It’s best to reach a compromise and focus on both.
As you scale effectively, sufficient capital, long-term business plan, and available resources should be considered. Don’t force expansions, rather focus on establishing valuable and close relationships that are important to your business.
Going back to Jane’s child care business: she knew that admitting new children could affect negatively the quality of her services (it could even endanger the kids). She focused on offering the best services that she could offer.
After two years in business, she was able to save enough money to build a childcare oriented facility (as she was originally operating on a rented space). She also was able to find trained and qualified staff. The new institution accommodated a larger number of children and she was able to admit more while offering superior service.
What does this mean?
The well-thought and strategic move helped Jane retain and attract new customers. There is no doubt that revenues increased.
The Best of Both Worlds
Most businesses find growth challenging at the beginning because it requires money. At this stage, the business’ finances may not meet all the expenses, including expansion. Therefore, they turn to business loans, but many financial institutions may not provide the required loan.
Luckily, Camino Financial small business loans are great tools designed to help business owners that need that extra cash flow. In three steps (and irrespective of the type of your business) we will match you with the best loan for your business, you just need to complete our online application.