A fast-growth mindset in business building is driven by factors like market opportunity, competitive pressure, and the desire for market dominance. In contrast to slow and steady organic growth, building a business with an emphasis on speed is intended to capitalize on market shifts, capture a large customer base quickly, and attract investment.
Benefits of rapid business building
Diversifying and future-proofing the business. For an established company, building new, fast-growing ventures can diversify revenue streams and hedge against market
Seizing market opportunities. Rapid business building can help a company quickly address unmet customer needs or enter a new, high-growth market. Fast growth is crucial in industries like technology, where a novel idea can lead to a first-mover advantage and significant market share if executed quickly.
Creating a barrier to entry. By growing fast and achieving a large market presence, a company can discourage competitors from entering the same space. Rapid expansion can increase brand awareness, lock in customers, and build economies of scale, making it difficult for newcomers to compete.
Attracting investment and talent. Demonstrating rapid, successful growth is a powerful way to attract venture capital and other forms of investment. A compelling growth story can also help a business recruit top talent, as high-performers are often drawn to innovative and ambitious companies.
Diversifying and future-proofing the business. For an established company, building new, fast-growing ventures can diversify revenue streams and hedge against market disruption or economic shocks. This approach allows the parent company to retain its core business while exploring new avenues for growth.
Testing business concepts quickly. Rather than a single massive bet, leading companies often use a portfolio approach to fast business building. This strategy involves launching and testing multiple new businesses, which allows them to diversify risk and double down on the concepts that show the most potential.
Risks and challenges
While the potential rewards of rapid business building are high, the approach is also associated with significant risks.
- The “growth trap.” A business can expand so quickly that its resources, people, and processes become overwhelmed. This can lead to cash flow problems, operational breakdowns, and employee burnout.
- Lack of stability. Businesses that focus on quick growth may neglect building a strong and stable foundation. Without clear policies and procedures, a rapidly growing company can become chaotic, with inconsistent products or services.
- Increased competition. The high-visibility growth of a business can attract the attention of larger, well-funded competitors, who may then try to replicate the successful product or service.
- High failure rate. Not all fast-building ventures succeed. In fact, one study found that only a fraction of new businesses launched by incumbent companies become large-scale enterprises.
A balanced approach
Some experts recommend a hybrid approach that combines the speed and agility of a startup with the resources and stability of an established company. Key elements of this strategy include:
- Developing new products or services for which a company does not have an existing footprint.
- Creating an in-house business-building engine to structure, staff, and scale new ventures.
- Focusing on building deep market understanding and a sound long-term customer acquisition strategy.