Destroying your business through growth

Niche markets exist that can sustain a higher price for your product than the wider market would suggest. By their very nature, niche markets will only consume small volumes of any product, and it’ll need to be high quality or your customers will walk away. This is not a high turnover strategy, but it’s often where businesses start their life.

These small businesses are staffed by the knowledgeable, enthusiastic types that originally gave birth to the Company. These are very high value individuals that will create that feeling of quality that niche customers prize so highly, and justifies your higher price.

Eventually, the time comes to make the decision whether to stay small forever, or start to scale up; and this is where disaster can strike.

Growing turnover is dependent on appealing to a larger market that rarely shares the values of your current clientele. Frequently prices must be reduced, but doing this on a large scale means cutting costs, especially wage bills. Poor staff leads to poor service, and to make matters worse, the decline causes those old hands to look for something better elsewhere… a downward spiral which can destroy reputations.

I’ve experienced this decline through several suppliers I’ve used over the years as they’ve attempted to grow. The message is clear: know your market, and when think carefully before making a decision you may regret.