Page 46 - (DK) The Business Book

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NOTHING GREAT

IS CREATED

SUDDENLY

HOW FAST TO GROW

IN CONTEXT

FOCUS
Business growth “Grow or die” When the market
thinking can lead
KEY DATES to overtrading and is growing, a company
must grow too...
1970s McKinsey & Company business failure.
consultants develop the MABA
matrix to help conglomerates
decide which divisions to
grow, and how quickly.
2001 Neil Churchill—professor
at INSEAD business school,
France and John Mullins—
professor at London Business
School, UK—write How Fast ...but that growth
Can Your Company Afford to Nothing great is must be balanced
Grow, introducing the self- created suddenly. and controlled.
financeable growth rate (SFG).
2002 Toyota announces plans
to be the world’s largest car
producer. Eight years later, after
recalling more than 8 million
cars due to quality issues, it ne reason many new is to balance income with
admits to growing too fast. businesses fail is, perhaps expenditure, ensuring that there
2012 Edward Hess writes O surprisingly, because they is sufficient cash to meet the rising
Grow to Greatness: Smart grow too fast. Excessively rapid costs of the business.
Growth for Entrepreneurial growth can cause companies to In 2001, business professors Neil
overreach their ability to fund Churchill and John Mullins created
Businesses, describing growth
growth: they simply run out of cash a formula for calculating the pace at
as recurring change.
to pay for day-to-day operations. which a company can expand from
A major challenge for any manager internal financing alone. Known