As my local city, Burlington, Vermont gets some great publicity on their Smart Growth plans1, I wonder if local businesses are considering the same. Growth is not always good for a business and I previously argued that some businesses should consider no growth. Quick growth can be bad for your business, so it’s important to consider why you are growing.
To What End?
To what end do you wish to grow your business? One of the beauties of being an entrepreneur is that you get to decide. While many businesses in the news may have goals of infinite (or at least as large as possible) growth, you can choose the scale of your business. Do you see yourself broadening your HR plan and managing managers? Do you have goals of influencing every household in America? If so, great! Look into ways to manage smart growth as many businesses struggle to handle growing pains and sporadic growth.2
Most importantly, create scenarios for your projections. You may find the most profitable scale of your business is smaller than you expected. This scale may also allow you to work smarter rather than harder.
Social & Environmental Costs
When figuring out if growth will help you and your business, you may want to factor in social costs. Recently some publicly-traded companies have factored in these costs, mostly in the context of their impact on the environment. While this was initially discussed in terms of Corporate Social Responsibility (CSR), some businesses have begun to shift towards more pointed topics like social costs and “Natural Capital,” or the value of the ecosystem services.3
Puma recently published an Environmental Profit and Loss Account4 which factored in their environmental impact and this appears to be a new trend. Tracking the social costs or impacts of doing business allows the companies to track their progress as they grow. Does it make sense for Puma to produce more shoes? At some factor of growth, their environmental costs (which as of 2010 were about 6.7% of the price of their shoes) could outgrow the benefits of their increased sales.
You can use this same philosophy in your smart growth planning for your business. How much is your free time worth? How many hours did you spend doing work that you found stressful? Will growing your business to that next level meet more of your personal goals?
This thought process can also be connected with your local community’s smart growth plans. Are your goals in line with your city’s smart growth plans? Smart growth projections may provide you with population projections and any limitations on housing development which will help you as you manage your business in no-growth situations. Your local city’s plans may also help you determine whether the benefit of the economic growth of your business outweighs the social/external costs of production. Are your business activities helping your city maintain their goals? Government and businesses need to work together to meet common goals.
For What Purpose?
On an international level, Paul Craig Roberts recently argued that companies are blocking government from meeting scientific goals.5 Roberts pointed out, quite gloomily, that as long as social costs are ignored in our version of capitalism, we will continue to destroy the environment- and in this case, our oceans. He argues that our social costs have outweighed the benefits of short-term gains from production and that we are doing nothing because of private lobbying interests. Roberts’ theory is not all that groundbreaking, but it may be motivation for you to reflect on the greater benefit of your business. While many fast-growing tech companies get the attention from media outlets, remember that not all business is about growth. Depending on your goals, a no growth business can be just as exciting and rewarding.
2) iveybusinessjournal.com/publication/growth-to-greatness-smart-growth-for-entrepreneurial-businesses/
3) http://www.theguardian.com/sustainable-business/blog/natural-capital-next-generation-csr
5) http://www.paulcraigroberts.org/2015/03/30/oceans-dying-paul-craig-roberts/