There are four constraints that prevent a business’s growth. A business will expand until it hits one of these limits. They are: customers, fulfillment, profitability, and owner goals.

The most common limit on growth is the availability of customers. Not possible customers, but actual customers. There are a thousand different ways that this can manifest, from a declining market, to poor visibility, to pricing-customer fit, and etc.

Less common is a lack of ability to fulfill. This is an operational obstacle where you have customers that want to buy, but there are internal issues that prevent you from effectively delivering the value. This can also show up in a variety of ways, from inventory challenges, to lack of available employees, inefficient processes, and etc.

Lack of profitability can also be a constraint to growth. It’s true that you can grow without profit, but it’s like holding your breath underwater- eventually you have to come up. There are only two results to growing without profit: selling the business to someone who doesn’t care (start up world) or bankruptcy. Profit acts as a constraint because growth puts exponential pressure on the business. With 5% in the red you can coast forever if your revenue is $10 a year. When it’s $10,000,000, losing $500,000 annually will eat through cash reserves.

Finally, the owner’s goals can limit a business’s growth. There are many owners that appreciate the lifestyle their business affords them and understand that growth would hamper that lifestyle. Additionally, there are businesses where growth exposes them to risk. We have a client that avoided growing for several years because FDA regulation on one of their products was up in the air and they didn’t want to paint a target on their back.

It seems pretty simple doesn’t, it? The catch is that simple isn’t easy.

You probably know which of these is holding your business back. The trick is to figuring out what exactly in that category is the limit. If it’s lack of customers, what are the exact issues that prevent more?

That’s a much more nebulous question, but answering it will provide you the key to unlocking the next level of growth.

Featured image is “Four Horsemen of the Apocalypse,” an 1887 painting by Viktor Vasnetsov. Used under public domain.