Principle: Growth Cliffs
What got you here likely won’t likely get you there. Let us help you navigate growth cliffs.
In simple terms, managing a $2 million business is vastly different from managing one at $80 million. "Growth Cliffs" occur when the strategies that once spurred growth, no longer work, causing growth to slow down. These cliffs are driven by market demand and your ability to supply.
Any business’s ability to grow constantly is driven by two main factors: market demand and resource capacity to supply. Notwithstanding there is demand for what you are selling, if you don’t adjust your resource capacity to supply efficiently and effectively, your business will experience diminishing returns on the resources it allocates. In other words, the structure that supports $8m in annual revenue won't suffice to reach $100m.
At Point16, we've identified three distinct growth cliffs between $1 million and $100 million. These cliffs are evident at specific revenue points: $1-2 million, $8-10 million, $20-24 million, $50 million, and around $100 million, regardless of the business's age or industry.
A common example involves businesses earning $8-10 million annually that rely heavily on one or two key individuals. While these individuals were invaluable during growth from $4-$9 million, they can become bottlenecks at $10-15 million. It's essential to delegate responsibilities to teams or implement systems to unlock further growth.
If maintaining your current approach makes it harder to achieve the same level of revenue growth, you might have hit a growth cliff. At Point16, we help businesses recognise and navigate these cliffs, ensuring sustained growth and success.
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