Business growth means expanding the firm’s products and services or expanding its target markets, or some combination of each. Any increase in the volume of activities of enterprises is a clear indication of growth.
Businesses grow for several reasons including taking advantage of a gap in the market, gaining a competitive advantage over rivals, and win increased market share.
Conventionally, people ascribe business successes or failures to fate/chance or certain environmental conditions including family background. Even though one could not entirely rule out the influence of changes in environmental factors, the entrepreneur’s positive attitude, discipline, skills, competencies, resilience, and experience are real factors determining the transition of an enterprise from a state up to fully grown or diversified ventures.
Usually, ventures start small because of limited knowledge of the market, a shortage of capital,l and lack of skilled employees, etc.
It is expected that as the entrepreneur gains more skills, and knowledge and acquires additional resources, the volume of activities of the business will expand. An entrepreneur may also capitalize on changes in the environment to expand his operations to exploit new opportunities.
Theorists have shown that behavioral traits are a significant influence on entrepreneurs’ desire to grow their businesses.
Some people inherently derive satisfaction from being excellent in what they do; they tend to have an insatiable desire to grow and positively affect the world around them.
Other people tend to be comfortable with average results while others are “easy come easy go”. In explaining the pattern of business growth, many theories rely on “the life-cycle approach.
This approach posits that just as humans pass through stages of physiological and psychological development from infancy to adulthood, businesses also evolve in predictable ways and encounter similar problems in their growth” (Bhide, 2000).
It is proposed that businesses pass through infancgrow andand, and h, maturity, and then decline or even close shop. Some scholars suggest more or fewer stages of development.
However, there is no consensus on the number of stages, nor on how they are related. moreover, the proposition that all businesses follow the set sequence is not at all supported by empirical evidence.
The main issue is that companies are started at one point and they need to be nurtured and managed to grow bigger and bigger. There are companies around the world that survive decades or centuries. The question is why some businesses survive and grow while others do not.
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Reasons for Business Growth
Researchers have shown that more than half of all businesses fail in less than two years of commencement. Also, a large number of those businesses that survive the first two years hardly grow. It is only a few businesses that survive, grow, regenerate and even create other businesses.
Conventionally, people ascribe business success or failures to fate/chance or certain environmental conditions including family background.
Even though one could not entirely rule out the influence of changes in environmental factors, the entrepreneur’s positive attitude, discipline, skills, competencies, resilience, and experience are real factors determining the transition of an enterprise from a state up to a fully grown or diversifies venture.
The question often asked is what motivates people to commit to starting and growing their businesses.
Usually, entrepreneurs tend to make critical investments, take acceptable risks and learn consistently because of their desire to make money and enjoy all the rights and privileges that come along with wealth.
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Other reasons include improved social status and well-being, greater opportunity for philanthropy and community services, and gaining control over their destiny.
Employees attribute the increases in income/benefits and advancement to businesses that grow. Government tends to favor business growth because it lessens unemployment and social tension in addition to raising more revenue from taxes.
Thus, it is in the best interest of business owners and other stakeholders in society for businesses to grow and flourish because growth tends to create social and economic value for all.
On a general note, startups and small businesses generate employment opportunities. ILO (2007) estimated that about 70% of the people in sub-Saharan Africa rely on small and informal establishments for their livelihood.
As employment is generated, the increase in productivity raises the level of wealth creation in a given economic environment. This is why the productivity of an economy is related to increasing income and improving standards of living.
Businesses combine human and material resources to create value. So, as the activities of enterprises increase due to an increase in labor productivity and efficient use of resources, all things being equal lead to high wages for individual workers, additional profit for the company, and a rise in GDP for the nation.
When productivity is higher, the cost of production tends to be lower. With the low cost of production, citizens obtain products cheaper, and these, in turn, increase living standards.
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