MBA1183 Guest Teacher: Paul Jarvis- Why growth might be the worst thing for your business.
Jan 21, 2019
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In this enlightening discussion, Paul Jarvis, a best-selling author and entrepreneur, shares his unconventional insights on the pitfalls of rapid business growth. He argues that excessive expansion can lead to catastrophic failures, emphasizing the importance of sustainability and longevity over aggressive scaling. Drawing lessons from a 1300-year-old hotel, Jarvis advocates for prioritizing remarkable service and stability. His perspective challenges entrepreneurs to rethink success and consider the value of staying small while fostering authentic customer relationships.
Rapid growth can jeopardize business survival, often leading to failure due to unsustainable expansion rather than poor strategies.
Long-term success and stability often stem from prioritizing exceptional customer service over aggressive growth initiatives in business.
Deep dives
The Dangers of Rapid Growth
Rapid growth can jeopardize the survival of a business rather than guarantee success. Research has shown that a significant percentage of high-growth startups ultimately fail, not due to poor business strategies but because they expanded too quickly without a sustainable foundation. This emphasizes that prioritizing growth over profitability can lead to catastrophic outcomes, including layoffs and even bankruptcy. A study on the fastest-growing companies revealed that many struggle to remain operational just a few years after their initial growth spurt, showing the real risks associated with scaling up.
Success in Staying Small
Focusing on maintaining a small business can often lead to long-term success and stability. For example, the Nishiyama Onsen Kyounkan has been operational for over 1,300 years by prioritizing exceptional customer service instead of pursuing aggressive expansion. This approach contrasts sharply with that of the Kongo Gumi company, which, despite its long history, succumbed to overwhelming debt after chasing rapid growth during Japan's economic bubble. This highlights that surviving and thriving in business often relies on fostering strong customer relationships and resisting the pressure to grow for growth's sake.
Defining True Success
Success in business should be measured by sustainability and customer satisfaction rather than sheer size or rapid growth. By focusing on what is truly needed to operate profitably, entrepreneurs can find fulfillment and a comfortable lifestyle without the complexities that come with managing a larger workforce. Many find that their financial needs are less than expected, and smaller businesses can comfortably meet those needs while providing a quality service. Ultimately, the goal is to create a business that aligns with personal values and contributes to long-term success without losing sight of what truly matters.
That might sound a little crazy to many entrepreneurs, but catastrophic success is a real and dangerous problem. Business after business has shot into the stratosphere, taking in investment and expanding their operations, only to crash and burn — hard.
If you’re not careful, your business can literally grow to death.
Take it from today’s special guest, Paul Jarvis. One of our first guest teachers ever, Jarvis is a best-selling author and entrepreneur who focuses on profitability and longevity. His deep analysis of startup success rates has revealed a stunning conclusion: that growth is far too valued among independent business people.
Tune in, and hear how growth for growth’s sake isn’t just pointless — it’s bad for business. Click play at the top of the page!